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Item 9A. Controls and Procedures

2023-02-14 compared with 2022-02-15 · 559 added, 516 removed, 1705 unchanged (39% of the section changed)

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Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2021 at the reasonable assurance level.

Based on the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022, at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

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Management must make judgments with respect to the relative cost and expected benefits of any specific control measure.

The design of a control system also is based in part upon assumptions and judgments made by management about the likelihood of future events, and there can be no assurance that a control will be effective under all potential future conditions.

The design of a control system also is based in part on assumptions and judgments made by management about the likelihood of future events, and there can be no assurance that a control will be effective under all potential future conditions.

As a result, even an effective system of internal control over financial reporting can provide no more than reasonable assurance with respect to the fair presentation of financial statements and the processes under which they were prepared.

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Based on this assessment, our management believes that, as of December 31, 2022, our internal control over financial reporting was effective.

Grant Thornton LLP, an independent registered public accounting firm that audited our consolidated financial statements included herein, has also audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in their report, which is included herein.

Grant Thornton LLP, an independent registered public accounting firm that audited our consolidated financial statements included herein, also has audited the effectiveness of our internal control over financial reporting as of December 31, 2022, as stated in their report, which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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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 General Partner has a board of directors (the “Board”) that manages our business, and the Board has appointed executive officers of the General Partner.

References to “our officers” and “our directors” in this section refers to the officers and directors of the General Partner.

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

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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.

The Board is comprised of nine members, eight of whom were designated by Energy Transfer and one of whom was designated by EIG Management Company, LLC (“EIG Management”) pursuant to a 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”).

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The Board considered all relevant facts and circumstances and applied the independence guidelines of the NYSE and the Exchange Act in determining that none of these directors has any material relationship with us, our management, the General Partner or its affiliates, or our subsidiaries.

Hartman is a Managing Director at EIG, and, since the Transactions Date, EIG owns over 80% of the Preferred Units and Warrants in the Partnership.

The Board determined that EIG’s ownership of Preferred Units and Warrants did not preclude the independence of Mr.

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.

Hartman is a Managing Director at EIG, and, since the Transactions Date, EIG has owned over 80% of the Preferred Units and outstanding Warrants in the Partnership.

Additionally, EIG owns 449,529 of our common units as a result of the exercise of certain of the Warrants in April 2022.

The Board determined that EIG’s ownership interest in the Partnership did not preclude the independence of Mr.

Hartman because (i) EIG’s ownership interest in the Partnership does 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.

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The audit committee of the Board (the “Audit Committee”) provides additional risk oversight through its quarterly meetings, where it discusses policies with respect to risk assessment and risk management, reviews contingent liabilities and risks that may be material to the Partnership, and assesses major legislative and regulatory developments that could materially impact the Partnership’s contingent liabilities and risks.

The Audit Committee is also required to discuss any material violations of our policies brought to its attention on an ad hoc basis.

The Audit Committee also is required to discuss any material violations of our policies brought to its attention on an ad-hoc basis.

Additionally, the Compensation Committee reviews our overall compensation program and its effectiveness at both linking executive pay to performance and aligning the interests of our executives and our unitholders.

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The Audit Committee has the sole authority to retain and terminate our independent registered public accounting firm, approve all auditing services and related fees and the terms thereof, and pre-approve any non-audit services to be rendered by our independent registered public accounting firm.

The Audit Committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm.

The Audit Committee also is responsible for confirming the independence and objectivity of our independent registered public accounting firm.

Our independent registered public accounting firm is given unrestricted access to the Audit Committee.

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During 2021, none of Mr.

Smith, or 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, none of Mr.

Smith, or Mr.

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

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Such conflicts committee will determine the resolution of the conflict of interest in any matter referred to it in good faith.

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.

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.

Corporate Governance Guidelines and Code of Ethics

The Board has adopted Corporate Governance Guidelines (the “Guidelines”) that outline important policies and practices regarding our governance and provide a framework for the function of the Board and its committees.

The Board has also adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the General Partner and its subsidiaries and affiliates, including us, and to all of its and their directors, employees and officers, including its principal executive officer, principal financial officer and principal accounting officer.

The Board also has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the General Partner and its subsidiaries and affiliates, including us, and to all of its and their directors, employees, and officers, including its principal executive officer, principal financial officer, and principal accounting officer.

We intend to post any amendments to the Code, or waivers of its provisions applicable to our directors or executive officers, including our principal executive officer and principal financial officer, on our website.

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Long 64 President and Chief Executive Officer and Director

Liuzzi 47 Vice President, Chief Financial Officer and Treasurer

Eric Scheller 58 Vice President and Chief Operating Officer

Pearl 51 Vice President, Chief Financial Officer and Treasurer

Scheller 59 Vice President and Chief Operating Officer

Christopher W.

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Mason 66 Director

Ramsey 66 Director

Brett Smith 63 Director

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Long co-founded Global Compression Services, Inc., a compression services company.

Long was formerly on the board of directors of the Wiser Oil Company, an NYSE listed company from May 2001 until it was sold to Forest Oil Corporation in May 2004.

Long was formerly on the board of directors of the Wiser Oil Company, a NYSE listed company from May 2001 until it was sold to Forest Oil Corporation in May 2004.

Long received his bachelor’s degree, with honors, in Petroleum Engineering from Texas A&M University.

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Long a valuable member of the Board.

Liuzzi has served as our Vice President, Chief Financial Officer and Treasurer since January 2015.

Prior to such time, Mr.

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

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.

Liuzzi worked primarily with midstream clients on a variety of investment banking assignments, including initial public offerings, public and private debt and equity offerings, as well as strategic advisory assignments.

He holds a B.A.

and an M.B.A., both from the University of Virginia.

Pearl has served as our Vice President, Chief Financial Officer and Treasurer since August 2022.

Prior to his appointment, Mr.

Pearl served as Senior Vice President and Chief Financial Officer of Western Midstream Holdings, LLC, the general partner of Western Midstream Partners, LP, from October 2019 until September 2020.

Prior to his service at Western Midstream, Mr.

Pearl was the Senior Vice President, Investor Relations at Anadarko Petroleum Corporation (“Anadarko”) from December 2018 to September 2019 and was Anadarko’s Vice President of Finance and Treasurer from June 2016 to November 2018.

Prior to that, since joining Anadarko in 2004, Mr.

Pearl served in various other leadership positions within Anadarko’s accounting and finance organization, including Director Corporate Tax and Corporate Controller.

In connection with his service at Anadarko, Mr.

Pearl served as Senior Vice President and Chief Financial Officer of the general partner of Western Midstream Operating, LP (formerly Western Gas Partners, LP) from 2007 – 2009, including at the time of its 2008 IPO.

Prior to joining Anadarko, Mr.

Pearl began his career at Ernst & Young, where he held positions of increasing responsibility in corporate tax and finance.

Pearl holds B.B.A.

degrees in accounting from Texas A&M University and an M.B.A.

from Rice University.

Scheller has served as our Vice President, Chief Operating Officer since June 2020.

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in Chemical Engineering (Math minor), a Masters of Chemical Engineering, and an M.B.A., all from the University of Houston.

Scheller is also a CFA ® charterholder.

Scheller also is a CFA ® charterholder.

Christopher W.

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From January 2010 through October 2015, Mr.

Porter practiced corporate and securities law at Hunton Andrews Kurth LLP, representing public and private companies, including master limited partnerships, in capital markets offerings and mergers and acquisitions.

Porter holds a B.B.A.

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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, 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 also has 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 April 2015.

Curia joined Energy Transfer Operating, L.P.

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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.

Joyce was with Apex International Energy (“Apex”) for over six years, most recently as their Chief Administrative Officer from January 2017 through April 2022.

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 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.

Since May 2022, Mr.

Long also has served as a director of Texas Capital Bancshares, Inc.

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

Long also has 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.

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Mason has served on the Board since April 2018.

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.

Since December 2022, Mr.

Mason has served as the Executive Vice President and President – LNG of the general partner of Energy Transfer LP.

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

and Energy Transfer Partners, L.P.

until December 2022 when he resigned from his role as General Counsel.

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 assumed leadership responsibility over Energy Transfer LP’s newly created 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 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.

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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 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.

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.

in Marketing from the University of Texas at Austin and a J.D.

from South Texas College of Law.

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 also has 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.

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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 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.

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Waldheim has served on the Board since April 2018.

Waldheim has also served on the board of directors of Southcross Energy Partners GP, LLC since February 2020.

Waldheim also has served on the board of directors of Southcross Energy Partners GP, LLC from February 2020 through April 2022.

Waldheim served as a director and a member of the Audit, Finance & Risk Committee of Enbridge Energy Company, Inc.

and Enbridge Energy Management, L.L.C.

and Enbridge Energy Management,

from February 2016 through December 2018.

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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 Energy Transfer LP, a position he has held since January 2021.

Since November 2022, Mr.

Whitehurst has served as the Executive Vice President of Tax and Corporate Initiatives of the general partner of Energy Transfer LP.

From January 2021 through November 2022, Mr.

Whitehurst was the Chief Financial Officer of the general partner of Energy Transfer LP.

Prior to that, Mr.

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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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Long, President and CEO;

Liuzzi, Vice President, Chief Financial Officer and Treasurer;

Pearl, Vice President, Chief Financial Officer and Treasurer;

Liuzzi, Former Vice President, Chief Financial Officer and Treasurer;

Scheller, Vice President and Chief Operating Officer;

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Kimble, Vice President, Human Resources.

Liuzzi left the Partnership effective August 8, 2022.

Pearl was appointed as our new Vice President, Chief Financial Officer and Treasurer effective August 9, 2022.

Compensation Philosophy and Objectives

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The following charts illustrate the level of at-risk incentive compensation we awarded in 2022 to our CEO and, on an averaged basis, the other NEOs.

Compensation has been annualized for NEOs that served for only a portion of 2022.

“Variable/at-risk” compensation is comprised of long-term equity incentive awards and annual discretionary cash bonuses, and “fixed” compensation is comprised of base salary.

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• approves the resulting cash or equity awards to the NEOs.

The Compensation Committee also considers other factors such as the role, contribution, skills, experience and performance of an individual relative to his or her peers at the Partnership.

The Compensation Committee also considers other factors such as the role, contribution, skills, experience, and performance of an individual relative to his or her peers at the Partnership, and internal compensation levels within Energy Transfer and its subsidiaries (the “Energy Transfer Group”).

The Compensation Committee does not assign a specific weight to these factors, but rather makes a subjective judgment taking all of these factors into account.

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The CEO considers comparative compensation data and evaluates the individual performance of each NEO and their respective contributions to the Partnership.

The recommendations are then reviewed by the Compensation Committee, which may accept the recommendations or make adjustments to the recommended compensation based on the Compensation Committee’s assessment of the individual’s performance and contributions to the Partnership.

The CEO’s compensation is reviewed and approved by the Compensation Committee based on comparative compensation data and the Compensation Committee’s independent evaluation of the CEO’s contributions to the Partnership’s performance.

The Compensation Committee regularly compares results for the annual base salary, annual short-term cash bonus and long-term equity incentive awards of the NEOs against data for compensation levels for specific executive positions reported in published executive compensation surveys within each of the (i) energy industry and (ii) overall market.

The Compensation Committee also reviews publicly filed peer group executive compensation disclosures pertaining to certain executive roles, but because of limited sample size due to the relatively small number of publicly traded natural gas compression companies, the Compensation Committee uses this data as a reference point rather than a primary data source.

The recommendations then are reviewed by the Compensation Committee, which may accept the recommendations or make adjustments to the recommended compensation based on the Compensation Committee’s assessment of the individual’s performance, contributions to the Partnership, and internal compensation levels within the Energy Transfer Group.

The CEO’s compensation is reviewed and approved by the Compensation Committee based on comparative compensation data, including within the Energy Transfer Group, and the Compensation Committee’s independent evaluation of the CEO’s contributions to the Partnership’s performance.

The Compensation Committee periodically compares results for the annual base salary, annual short-term cash bonus, and long-term equity incentive awards of the NEOs against data for compensation levels for specific executive positions reported in published executive compensation surveys within each of the (i) energy industry and (ii) overall market.

The Compensation Committee also reviews publicly filed peer group executive compensation disclosures pertaining to certain executive roles, utilizing this data as an important reference point.

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 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.

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

Antero Midstream Corporation AM

Archrock, Inc.

Crestwood Equity Partners LP CEQP

Genesis Energy, L.P.

Holly Energy Partners, L.P.

Martin Midstream Partners L.P.

NuStar Energy, L.P.

SemGroup Corporation SEMG

Summit Midstream Partners, LP SMLP

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.

In 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”).

In 2022, the Compensation Committee had Meridian update the 2021 Report to account for the impact of inflation, but determined that otherwise the 2021 Meridian Report was completed recently enough to be utilized as a data source in reviewing and setting 2023 NEO compensation levels.

As a result, the Compensation Committee relied on the results of the 2021 Meridian Report, as updated, for information on base salary, bonus, and general compensation items for 2023 for the NEOs.

The Compensation Committee also utilized the 2021 Meridian Report, as updated, when determining the value of equity awards that should be granted to our NEOs in December 2022, which were based on the then-determined 2023 base salaries of the NEOs.

In connection with the engagement of Meridian in 2021, 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:

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Elements of the Compensation Program

Compensation for the NEOs consists primarily of the following elements and corresponding objectives:

Compensation for the NEOs primarily consists of the following elements and corresponding objectives:

Compensation Element Primary Objective

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Base Salary for 2022

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 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.

Base salaries for the NEOs generally have 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 on 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 2022, the Compensation Committee and CEO considered cost of living increases, internal compensation levels within the Energy Transfer Group, and comparable salaries for certain executive roles within our peer group contained in the 2021 Meridian Report.

The Compensation Committee provided an increase to base salary for certain NEOs for the 2022 year.

The 2022 base salaries and 2021 base salaries for the NEOs, including our CEO, are set forth in the following table:

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Long, President and Chief Executive Officer 683,972 664,050

Liuzzi, Vice President, Chief Financial Officer and Treasurer 412,000 412,000

Pearl, Vice President, Chief Financial Officer and Treasurer 400,000 (1) N/A

Liuzzi, Former Vice President, Chief Financial Officer and Treasurer 424,360 (2) 412,000

Scheller, Vice President and Chief Operating Officer 360,500 350,000

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________________________

(1) The amount above reflects the base salary effective upon Mr.

Scheller’s appointment as Vice President and Chief Operating Officer on June 2, 2020.

Scheller’s base salary for 2020 in his prior position was $265,225.

Pearl joined the Partnership effective August 9, 2022.

The amount above reflects his annualized base salary for 2022.

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

Scheller in 2020.

Pearl in 2022.

Liuzzi left the Partnership effective August 8, 2022.

The amount above reflects his annualized base salary for 2022.

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

Liuzzi in 2022.

Annual Cash Incentive Compensation for 2022

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In February 2023, the Compensation Committee made the determination to pay annual cash bonus awards to executives, including the NEOs, under the Bonus Plan attributable to the year ended December 31, 2022.

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.

Although the Bonus Plan generally is based on our satisfaction of certain performance measures that were previously established for the 2022 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.

Bonus Plan Payout Factors

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Safety Budget Target Payout Factor 10%

Each of the Adjusted EBITDA Budget Target Factor (the “Adjusted EBITDA Factor”) and the Distributable Cash Flow Budget Target Payout Factor (the “DCF Factor”) assign payout factors from 0% to 120% based on the percentage of the Partnership’s budgeted Adjusted EBITDA and DCF, respectively, achieved for the year, as shown in the following chart.

Each of the Adjusted EBITDA Budget Target Factor (the “Adjusted EBITDA Factor”) and the Distributable Cash Flow, or DCF, Budget Target Payout Factor (the “DCF Factor”) assign payout factors from 0% to 120% based on the percentage of the Partnership’s budgeted Adjusted EBITDA and DCF, respectively, achieved for the year, as shown in the following chart.

Adjusted EBITDA and DCF Factors

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For the 2022 year, the Compensation Committee set the Adjusted EBITDA Budget Target at $416.1 million and the DCF Budget Target at $223.5 million.

The Leverage Ratio Budget Target Factor (the “Leverage Ratio Factor”) assigns payout factors based on the Partnership’s achievement of its budgeted Leverage Ratio (as defined in the Partnership’s Credit Agreement, provided that, for purposes of calculating the Leverage Ratio for the Bonus Plan, EBITDA attributable to the full plan year is used in lieu of any other time period) for the year, as shown in the following chart.

calculating the Leverage Ratio for the Bonus Plan, EBITDA attributable to the full plan year is used in lieu of any other time period) for the year, as shown in the following chart.

Leverage Ratio Factor

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In determining bonuses for the NEOs, the Compensation Committee takes into account whether the Partnership achieved or exceeded its targeted performance objectives.

In the case of the NEOs, their bonus pool targets for the 2021 year range from 90% to 125% of their respective annual base earnings (which amount reflects the actual base salary earned during the calendar year to reflect periods before and after any base salary adjustment).

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.

In the case of the NEOs, their bonus pool targets for the 2022 year range from 90% to 125% of their respective annual base salary.

For the 2022 year, the Compensation Committee set a target bonus amount (the “Target Bonus”) for each NEO, other than Mr.

Pearl, prior to the first quarter of the 2022 year, which was set as a percentage of the NEO’s base salary.

Pearl’s Target Bonus was set by the Compensation Committee in August 2022 prior to his appointment.

For the bonus applicable to the 2022 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 ($)

Name Percentage of Base Salary Target

Long, President and Chief Executive Officer 125 % 854,965

Liuzzi, Vice President, Chief Financial Officer and Treasurer 105 % 432,600

Pearl, Vice President, Chief Financial Officer and Treasurer 100 % 400,000 (1)

Liuzzi, Former Vice President, Chief Financial Officer and Treasurer 105 % 445,578

Scheller, Vice President and Chief Operating Officer 90 % 324,450

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

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.

________________________

(1) This amount reflects Mr.

Pearl’s annualized Target Bonus for 2022.

Pearl’s actual Target Bonus was prorated based on the length of his employment with the Partnership during 2022.

The annual cash bonus pool targets for 2022 were based on the determination of the Compensation Committee in consultation with Meridian (other than for Mr.

Pearl), 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.

Target Bonuses, if any, are paid within one week following delivery by our independent auditor of the audit of our financial statements for the year to which the Target Bonus relates, but in any case, no later than March 15 of the year following the year to which the Target Bonus relates.

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(ii) DCF of $221,498,912, resulting in a DCF Bonus Pool Payout Factor of 1.00;

(iii) Leverage Ratio, as calculated for the purposes of the Bonus Plan, of 5.07, resulting in a Leverage Ratio Bonus Pool Payout Factor of 1.10;

(iii) Leverage Ratio, as calculated for the purposes of the Bonus Plan, of 5.06x, resulting in a Leverage Ratio Bonus Pool Payout Factor of 1.00;

and (iv) a TRIR of 0.12 resulting in a Safety Bonus Pool Payout Factor of 1.0.

2 unchanged sentences

Long, President and Chief Executive Officer 854,965

Liuzzi, Vice President, Chief Financial Officer and Treasurer 445,578

Pearl, Vice President, Chief Financial Officer and Treasurer 158,904 (2)

Scheller, Vice President and Chief Operating Officer 324,450

2 unchanged sentences

Kimble, Vice President, Human Resources 292,500

________________________

Liuzzi left the Partnership prior to the payout of the Target Bonuses for the year ended December 31, 2022.

Accordingly, no bonus payment was made to Mr.

Liuzzi for 2022.

(2) This amount reflects 100% of Mr.

Pearl’s prorated Target Bonus for 2022 based on the length of his employment with the Partnership during 2022.

Long-Term Equity Incentive Awards

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, 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 outstanding, unvested Phantom Units granted under the LTIP and held by the NEOs are reflected below in “– Outstanding Equity Awards as of December 31, 2022.”

Our current Phantom Unit Agreement (i) provides for incremental vesting over five years in two tranches ((a) 60% on the third December 5 following the grant and (b) 40% on the fifth December 5 following the grant), (ii) provides for vesting of 100% of the outstanding, unvested Phantom Units in the event of (a) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) or (b) 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, (iii) provides for vesting of 40% of the outstanding, unvested Phantom Units if the NEO voluntarily retires between the ages of 65-68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 60% being forfeited), and (iv) provides for vesting of 50% of the outstanding, unvested Phantom Units if the NEO voluntarily retires over the age 68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 50% being forfeited).

Our current Phantom Unit Agreement (i) provides for incremental vesting over five years in two tranches ((a) 60% on the third December 5 following the grant and (b) 40% on the fifth December 5 following the grant), (ii) provides for vesting of 100% of the outstanding, unvested Phantom Units in the event of (a) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) or (b) 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, (iii) provides for vesting of 40% of the outstanding, unvested Phantom Units if the NEO voluntarily retires between the ages of 65–68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 60% being forfeited), and (iv) provides for vesting of 50% of the outstanding, unvested Phantom Units if the NEO voluntarily retires at or over the age 68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 50% being forfeited).

The vesting of the Phantom Units are subject, in each case, to the NEO’s continued employment with us until the relevant vesting date.

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 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.

In determining the level of the December 2022 grants of Phantom Units to the NEOs, the Compensation Committee, taking into account the role, contribution, skills, experience, and performance of an NEO relative to his or her peers at the Partnership, award levels within the Energy Transfer Group, and market data contained in the 2021 Meridian Report, determined each of the NEOs’ long-term incentive targets.

Due to the fact that determinations were made in late 2022, the base salaries used for these calculations were the then-determined base salaries set for the 2023 calendar year.

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Long, President and Chief Executive Officer 500 % 3,556,652

Liuzzi, Vice President, Chief Financial Officer and Treasurer 250 % 1,060,900

Pearl, Vice President, Chief Financial Officer and Treasurer 225 % 936,000

Scheller, Vice President and Chief Operating Officer 200 % 770,000

2 unchanged sentences

Kimble, Vice President, Human Resources 175 % 591,500

________________________

Liuzzi left the Partnership prior to the grant of the long-term incentive awards for 2022.

Accordingly, no long-term incentive award was granted to Mr.

Liuzzi for 2022.

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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The Compensation Committee did not award any Retention Units to our NEOs in 2020, 2021, or 2022.

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.

The Retention Units 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.

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.

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We believe our compensation program for all of our employees, including the NEOs, is appropriately structured and not reasonably likely to result in material risk to us because it is structured in a manner that does not promote excessive risk-taking that could damage our reputation, negatively impact our financial results, or reward poor judgment.

We have also allocated our compensation among base salary and short and long-term compensation in such a way as to not encourage excessive risk-taking.

We also have allocated our compensation among base salary and short- and long-term compensation in such a way as to not encourage excessive risk-taking.

Furthermore, all business groups and employees receive the similar compensation components of base pay and short-term incentives.

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Joyce (Chairman)

The foregoing report shall not be deemed to be incorporated by reference by any general statement or reference to this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, as amended, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under those Acts.

The foregoing report shall not be deemed to be incorporated by reference by any general statement or reference to this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and otherwise shall not be deemed filed under those Acts.

Summary Compensation Table

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

Name and Principal Position Year Salary ($) Unit

Name and Principal Position Year Salary ($) Bonus

($) (2) Non-Equity Incentive Plan Compensation ($) (3) All Other

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2020 688,846 — 2,656,189 755,357 1,053,015 5,153,407

2021 412,000 1,060,888 445,578 603,377 2,521,843

Pearl 2022 160,000 — 1,335,984 158,904 14,991 1,669,879

Vice President, Chief Financial Officer and Treasurer

2022 254,616 — — — 2,411,449 2,666,065

Former Vice President, Chief Financial Officer and Treasurer 2021 412,000 — 1,060,888 445,578 603,377 2,521,843

2020 427,385 — 1,029,995 393,666 459,159 2,310,205

Scheller 2022 360,500 — 769,997 324,450 298,387 1,753,334

Vice President and Chief Operating Officer 2021 350,000 — 720,997 324,450 214,883 1,610,330

2020 314,384 — 612,496 209,914 114,911 1,251,705

Christopher W.

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2020 326,154 — 577,490 229,320 150,872 1,283,836

2022 325,000 9,750 591,496 292,500 298,908 1,517,654

Vice President, Human Resources 2021 325,000 — 568,749 301,275 268,950 1,463,974

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________________________

(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.

Kimble was granted a one-time lump sum payment of $9,750 by the Compensation Committee.

(2) The Phantom Unit values reflect the aggregate 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”.

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$ 1,495,135 $ 18,000 $ 15,250 $ 19,724 $ 8,659

$ 587,902 — $ 14,500 — $ 974

Pearl $ 11,667 — $ 2,308 — $ 1,017

Liuzzi $ 450,192 — $ 12,731 — $ 650

Scheller $ 282,162 — $ 15,250 — $ 974

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$ 280,109 — $ 15,250 — $ 3,550

Liuzzi left the Partnership effective August 8, 2022.

In connection with his departure, he received a separation payment of $410,895 and a Release Payment in the amount of $123,687 under his Retention Agreements.

Additionally, 78,779 unvested Phantom Units granted to Mr.

Liuzzi under his Retention Agreements and his Employee Phantom Unit Agreement dated December 5, 2019 vested in connection with his departure, which units had a value of $1,413,295 on the date of Mr.

Liuzzi’s departure.

Grants of Plan-Based Awards during the Year Ended December 31, 2022

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President and Chief Executive Officer 12/5/2022 10/28/2022 193,611 3,556,634

Liuzzi 2/10/2021 432,600 510,468

Pearl 8/9/2022 158,904 187,507

Vice President, Chief Financial Officer and Treasurer 8/9/2022 8/5/2022 22,222 399,996

12/5/2022 10/28/2022 50,952 935,988

Liuzzi 2/10/2022 445,578 525,782

Former Vice President, Chief Financial Officer and Treasurer

Scheller 2/10/2022 324,450 382,851

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The potential payout pursuant to these awards could be zero, thus we have not reflected a threshold amount in the table above.

Actual amounts earned for the 2021 year have been reflected within the Summary Compensation Table above.

(2) The Phantom Units granted on December 5, 2021 to our NEOs were granted pursuant to our LTIP and will 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.

These Phantom Units will also vest in full upon a Change in Control (as defined in the LTIP) or the death or Disability (as defined in the LTIP) of the NEO.

If the NEO retires after attaining the age of 65, 60% of his then-unvested Phantom Units granted on December 5, 2021 will be forfeited, and the remainder will vest, at the time of retirement.

If the NEO is over age 68 at the time of retirement, 50% of his then-unvested Phantom Units granted December 5, 2021 will be forfeited, and the remainder will vest, at the time of retirement.

(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 $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.

Actual amounts earned for 2022 have been reflected within the Summary Compensation Table above.

(2) The Phantom Units granted to our NEOs on December 5, 2022, and to Mr.

Pearl on August 9, 2022, were granted pursuant to our LTIP and will vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027.

These Phantom Units also will vest in full upon a Change in Control (as defined in the LTIP) or the death or Disability (as defined in the LTIP) of the NEO.

If the NEO retires after attaining the age of 65 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 60% of his then-unvested Phantom Units granted on December 5, 2022, will be forfeited, and the remainder will vest, at the time of retirement.

If the NEO is at or over age 68 at the time of retirement and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 50% of his then-unvested Phantom Units granted December 5, 2022, will be forfeited, and the remainder will vest, at the time of retirement.

(3) The Phantom Units granted to our NEOs on December 5, 2022, and to Mr.

Pearl on August 9, 2022, were granted in tandem with a corresponding DER.

(4) The reported grant date fair value of unit awards was calculated by multiplying the closing price of the Partnership’s common units on the grant date by the number of units granted, as required by FASB ASC Topic 718.

The closing price of the Partnership’s common units was $18.00 on August 9, 2022, and $18.37 on December 5, 2022.

Outstanding Equity Awards as of December 31, 2022

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2021 Grant 182,880 (6) 3,571,646

Liuzzi, Vice President, Chief Financial Officer and Treasurer

41,434 (1)(2) 723,023

90,690 (3)(4) 1,582,541

2022 Grant 193,611 (7) 3,781,223

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

Pearl, Vice President, Chief Financial Officer and Treasurer

2022 Grants 73,174 (7)(8) 1,429,088

Scheller, Vice President and Chief Operating Officer

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2021 Grant 48,195 (6) 941,248

2022 Grant 41,916 (7) 818,619

Christopher W.

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2021 Grant 48,128 (6) 939,940

2022 Grant 40,762 (7) 796,082

Kimble, Vice President, Human Resources

3 unchanged sentences

2021 Grant 38,018 (6) 742,492

2022 Grant 32,199 (7) 628,846

________________________

(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, of which 36,000 and 14,000 remain unvested as of December 31, 2021, respectively.

Long received a grant of 90,000 Retention Units pursuant to the LTIP and a Retention Agreement, of which 36,000 remain unvested as of December 31, 2022.

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:

(2) Includes Phantom Units granted pursuant to the LTIP on December 5, 2018, to the following NEOs, of which the following remain unvested as of December 31, 2022:

Long – 70,749;

Liuzzi - 27,434;

Scheller – 5,486;

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Kimble – 14,770.

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

(3) Includes Phantom Units granted pursuant to the LTIP on December 5, 2019, to the following NEOs, of which the following remain unvested as of December 31, 2022:

Long – 66,822;

Scheller – 12,578;

Porter – 12,679;

Kimble – 13,951.

These remaining unvested Phantom Units will vest on December 5, 2024.

(4) On December 5, 2019, Mr.

Long received a grant of 41,764 Retention Units pursuant to the LTIP and a Retention Agreement, of which 16,705 remain unvested as of December 31, 2022.

These remaining unvested Retention Units will vest on December 5, 2024.

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

167,056 to Mr.

64,779 to Mr.

31,446 to Mr.

31,698 to Mr.

and 34,878 to Mr.

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

Long – 213,520;

Scheller – 49,236;

Porter – 46,422;

Kimble – 45,719.

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.

(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:

213,520 to Mr.

82,797 to Mr.

49,236 to Mr.

46,422 to Mr.

and 45,719 to Mr.

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

Long – 182,880;

Scheller – 48,195;

Porter – 48,128;

Kimble – 38,018.

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.

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

182,880 to Mr.

70,915 to Mr.

48,195 to Mr.

48,128 to Mr.

and 38,018 to Mr.

(7) Includes Phantom Units granted pursuant to the LTIP on December 5, 2022, to the following NEOs:

Long – 193,611;

Pearl – 50,952;

Scheller – 41,916;

Porter – 40,762;

Kimble – 32,199.

The Phantom Units granted on December 5, 2022, vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027.

(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.

(8) In connection with his appointment, Mr.

Pearl received a grant of 22,222 Phantom Units pursuant to the LTIP on August 9, 2022.

These Phantom Units vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027.

Liuzzi left the Partnership effective August 8, 2022.

Any equity awards that did not vest in connection with his departure were forfeited.

(10) The market value of Phantom Units is calculated by multiplying $19.53, the closing price of the Partnership’s common units on December 30, 2022, the last trading day of 2022, by the number of Phantom Units outstanding.

Units Vested During the Year Ended December 31, 2022

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Long, President and Chief Executive Officer 125,293 (1) 2,301,632

Liuzzi, Vice President, Chief Financial Officer and Treasurer 73,671 (2) 1,103,385

Pearl, Vice President, Chief Financial Officer and Treasurer — —

Liuzzi, Former Vice President, Chief Financial Officer and Treasurer 78,779 (2)(3) 1,413,295

Scheller, Vice President and Chief Operating Officer 18,868 346,605

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The remaining 62,646 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.

The remaining 36,835 Phantom Units vested following such cash settlement.

Porter settled approximately 50% of his newly vested Phantom Units in cash in the amount of $146,616 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 9,790 Phantom Units vested following such cash settlement.

(2) 38,868 of these vested Phantom Units were settled 100% in cash by the Compensation Committee in the amount of $697,292 (before taxes).

Liuzzi settled approximately 50% of the remaining vested Phantom Units in cash in the amount of $358,011 (before taxes).

The remaining 19,955 Phantom Units vested following such cash settlements.

(3) 39,911 unvested Phantom Units granted to Mr.

Liuzzi under his Retention Agreements vested in connection with his departure on August 8, 2022.

Additionally, the Compensation Committee approved accelerated vesting of 38,868 Phantom Units granted to Mr.

Liuzzi on December 5, 2019, which Phantom Units vested in connection with Mr.

Liuzzi’s departure and his execution of a Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims.

Kimble settled approximately 50% of his newly vested Phantom Units in cash in the amount of $192,224 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 10,463 Phantom Units vested following such cash settlement.

(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.

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

Liuzzi was calculated by multiplying $17.94, the closing price of the Partnership’s common units on the date of vesting (August 8, 2022) by the number of Phantom Units vesting on such date.

The value realized on the vesting of Phantom Units for Messrs.

Long, Scheller, Porter, and Kimble was calculated by multiplying $18.37, the closing price of the Partnership’s common units on the date of vesting (December 5, 2022) by the number of Phantom Units vesting on such date.

Potential Payments upon Termination or Change in Control

3 unchanged sentences

On November 1, 2018, 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, 2021 and the remaining 40% of the Retention Units vesting on December 5, 2023.

Long and Liuzzi entered into a Retention Agreement providing for a grant of Retention Units that 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.

Long and Liuzzi entered into another Retention Agreement providing for a grant of Retention Units that 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 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.

1 unchanged sentence

Long’s termination of employment due to voluntary retirement, provided that Mr.

Long is at least 65 years of age at the time of such retirement and has been employed by the Company, the Partnership or their Affiliates for at least 10 years, 40% of his then-outstanding, unvested Retention Units will receive accelerated vesting and the remaining 60% will automatically be forfeited at the time of his retirement pursuant to the terms of Mr.

Long’s Retention Agreement.

In connection with Mr.

Liuzzi’s departure from the Partnership, he received a $123,687 Release Payment and all of his outstanding Retention Units vested.

For additional information regarding the amounts received by Mr.

Liuzzi upon his departure, please see the “Potential Payments upon Termination or Change in Control” table below.

As used in the Retention Agreements, “Cause” means (1) the commission by the NEO of a criminal or other act that involves dishonesty, misrepresentation or moral turpitude;

14 unchanged sentences

For any resignation to be treated as based on “Good Reason” under the Retention Agreement, the following must occur:

(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;

(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 30 days following its receipt of such during which it may remedy the condition;

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The Employment Agreements provide for the following in the event of a termination of the NEO without Cause or by the NEO with Good Reason (each as defined in the Employment Agreements and set forth below):

(i) semi-monthly severance payments for the one year period following the NEO’s Separation from Service (the “Severance Period”) in an amount totaling the higher of the NEO’s Base Salary for (a) the current year and (b) any previous year during the term of the Employment

Agreement (the “Severance Payment”);

(i) semi-monthly severance payments for the one-year period following the NEO’s Separation from Service (the “Severance Period”) in an amount totaling the higher of the NEO’s Base Salary for (a) the current year and (b) any previous year during the term of the Employment Agreement (the “Severance Payment”);

(ii) the entire amount of any earned Annual Bonus for the year preceding the year in which the NEO is terminated by the Company for “convenience” (as defined in the Employment Agreements and set forth below) or resigns for Good Reason;

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As used in the Employment Agreements, a termination for “convenience” generally means an involuntary termination for any reason, including, under certain circumstances, a failure to renew the employment agreement at the end of an initial term or any renewal term, other than a termination for “Cause.” “Cause” is defined in the Employment Agreements to mean (i) any material breach of the Employment Agreement, including the material breach of any representation, warranty or covenant made under the Employment Agreement by the NEO, (ii) the NEO’s breach of any applicable duties of loyalty to the Company or any of its affiliates, gross negligence or material misconduct, or a significant act or acts of personal dishonesty or deceit, taken by the NEO, in the performance of the duties and services required of the NEO that is demonstrably and significantly injurious to the Company or any of its affiliates, (iii) conviction of a felony or crime involving moral turpitude, (iv) the NEO’s willful and continued failure or refusal to perform substantially the NEO’s material obligations pursuant to the Employment Agreement or follow any lawful and reasonable directive from the CEO or the Board, as applicable, other than as a result of the NEO’s incapacity, or (v) a violation of federal, state or local law or regulation applicable to the business of the Company that is demonstrably and significantly injurious to the Company.

“Good Reason” is defined in Employment Agreements to mean (i) a material breach by the Company of the Employment Agreement or any other material agreement with the NEO, (ii) a material reduction in the NEO’s base salary, other than a reduction that is generally applicable to all similarly situated employees of the Company, (iii) a material reduction in the NEO’s duties, authority, responsibilities, job title or reporting relationships, (iv) a material reduction by the Company in the facilities or perquisites available to the NEO, other than a reduction that is generally applicable to all similarly situated employees, or (v) the relocation of the geographic location of the NEO’s current principal place of employment by more than 50 miles from the location of the NEO’s principal place of employment as of the effective date of the Employment Agreement.

reduction that is generally applicable to all similarly situated employees of the Company, (iii) a material reduction in the NEO’s duties, authority, responsibilities, job title or reporting relationships, (iv) a material reduction by the Company in the facilities or perquisites available to the NEO, other than a reduction that is generally applicable to all similarly situated employees, or (v) the relocation of the geographic location of the NEO’s current principal place of employment by more than 50 miles from the location of the NEO’s principal place of employment as of the effective date of the Employment Agreement.

“Disability” is defined in the Employment Agreements as the NEO being unable to perform essential functions of his position, with reasonable accommodation, due to an illness or physical or mental impairment or other incapacity which continues for a period in excess of 20 consecutive weeks.

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Change in Control Benefits – LTIP

On November 1, 2018, the Compensation Committee adopted the Phantom Unit Agreement, which (i) provides for incremental vesting of Phantom Units over five years (60% on the third December 5 following the grant and 40% on the fifth December 5 following the grant) and (ii) provides for vesting of 100% of the outstanding, unvested Phantom Units in the event

of (a) a Change in Control (as defined under the LTIP and set forth below) or (b) the death or Disability of the NEO.

Also, under the Phantom Unit Agreement, if the NEO has been employed by the Company, the Partnership, or their Affiliates for at least 10 years and is at least 65 at the time of his voluntary retirement, 60% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement.

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.

If the NEO has been employed by the Company, the Partnership or their Affiliates for at least 10 years and is at or 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.

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

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The amounts actually payable to any NEO can only be calculated with certainty upon actual termination or a Change in Control.

Except as otherwise noted, the value of the acceleration of the LTIP awards was calculated using the value of $17.45, which was the closing price of the Partnership’s common units on December 31, 2021.

Except as otherwise noted, the value of the acceleration of the LTIP awards was calculated using the value of $19.53, which was the closing price of the Partnership’s common units on December 30, 2022, the last trading day of 2022.

Executive Benefits and

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Accelerated Vesting of Retention Units (9) 1,029,329 1,029,329 1,029,329 — 1,029,329

Severance Payment under Retention Agreements (10) 276,438 276,438 — — —

Release Payment under Retention Agreements (10) 223,385 223,385 — — —

15,462,390 1,252,714 15,239,005 — 15,239,005

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Accelerated Vesting of Phantom Units (8) 1,429,088 — 1,429,088 — 1,429,088

Accelerated Vesting of Retention Units (9) 696,447 696,447 696,447 — 696,447

Severance Payment under Retention Agreements (10) 131,473 131,473 — — —

1,429,088 — 1,429,088 — 1,429,088

Former Vice President, Chief Financial Officer and Treasurer

Salary — — — — —

Bonus — — — — —

Accelerated Vesting of Phantom Units — — — — —

Accelerated Vesting of Retention Units — — — — —

Release Payment under Retention Agreements — — — — —

Vice President and Chief Operating Officer

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(2) The listed bonus amount for each of Messrs.

Kimble and Porter is his pro rata bonus awarded with respect to the year ended December 31, 2021 and his bonus awarded with respect to the year ended December 31, 2020.

Porter and Kimble is his pro rata bonus awarded with respect to the year ended December 31, 2022, and his bonus awarded with respect to the year ended December 31, 2021.

(3) The Employment Agreements for each of Messrs.

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and the NEO will be responsible for the proportion that the Company covered during the first 12 months of the Coverage Period.

Long, Liuzzi and Scheller are not currently party to any contractual arrangements providing for continued health insurance coverage by the Company following a termination of employment.

Long, Pearl, and Scheller are not currently party to any contractual arrangements providing for continued health insurance coverage by the Company following a termination of employment.

(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, 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.

(9) The Retention Agreements for Messrs.

Long and Liuzzi provide that 100% of the outstanding, unvested Retention Units held by the applicable NEO will vest immediately prior to the NEO’s Separation from Service for the following reasons:

(i) termination of the NEO by the Company without Cause or by the NEO with Good Reason, (ii) upon a Change in Control, and (iii) upon the death or Disability of the NEO.

Notwithstanding the foregoing, with respect to the Phantom Units granted on December 5, 2018, December 5, 2019, December 5, 2020, December 5, 2021, and December 5, 2022, and with respect to Mr.

Pearl, August 9, 2022 (collectively, the “NEO Employee Phantom Units”), if the NEO retires after attaining the age of 65 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 60% of his then-unvested NEO Employee Phantom Units will be forfeited, and the remainder will vest, at the time of retirement and, if the NEO is at or over age 68 at the time of retirement and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 50% of his then-unvested NEO Employee 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 NEO Employee 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 NEO Employee Phantom Units would vest.

(9) The Retention Agreements for Mr.

Long provide that 100% of the outstanding, unvested Retention Units held by Mr.

Long will vest immediately prior to Mr.

Long’s Separation from Service for the following reasons:

(i) termination of Mr.

Long by the Company without Cause or by Mr.

Long with Good Reason, and (ii) upon the death or Disability of Mr.

In the event of a Change in Control (as defined under the LTIP), 100% of Mr.

Long’s outstanding, unvested Retention Units would vest.

Long terminates his employment due to retirement and he is at the time of retirement 65 years of age or older, 40% of his then-unvested Retention Units will vest and the remaining 60% of his then-unvested Retention Units will be forfeited.

(10) For Messrs.

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.

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%.

(10) Provided that Mr.

Long executes and does not revoke a general release and waiver of claims, Mr.

Long will be entitled to the Release Payment, which is 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 Mr.

Long’s date of separation.

The tax withholding rate as of December 31, 2022, for Mr.

Long applicable to the vesting of the Retention Units would have been 39.35%.

Liuzzi left the Partnership effective August 8, 2022.

In recognition of his service and contributions to us and as approved by our Compensation Committee, we paid Mr.

Liuzzi a separation payment of $410,895 (the “Separation Payment”) and accelerated vesting of 38,868 Phantom Units granted to Mr.

Liuzzi under a Phantom Unit Agreement dated December 5, 2019, which was settled in cash (the “Phantom Unit Payment”).

These Phantom Units had a value of $697,292 on the date they vested.

Additionally, in connection with his departure Mr.

Liuzzi received a $123,687 Release Payment under his Retention Agreements, and all 39,911 unvested Phantom Units granted to Mr.

Liuzzi under his Retention Agreements vested, which Phantom Units had a value of $716,003 on the date they vested.

The Separation Payment, the Phantom Unit Payment and the Release Payment were paid in a lump sum and were contingent upon Mr.

Liuzzi’s execution of a Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims pursuant to which he released all claims against us, and which provides for certain non-solicitation, non-disparagement and confidentiality covenants, as well as an acknowledgment of his continuing obligations under his Retention Agreements dated November 1, 2018 and December 5, 2019, and his Phantom Unit Agreement dated December 5, 2019.

Liuzzi also received $9,793 of earned but unpaid base salary as of August 8, 2022, the date of his departure, bringing the total amount received by Mr.

Liuzzi pursuant to his departure to $1,957,670.

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.

In accordance with Item 402(u), we are basing the following pay ratio information on the same median employee that we selected for the fiscal year ended 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 2022.

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Long’s compensation as an NEO is reflected in the Summary Compensation Table above.

Officers, employees or paid consultants or advisors of us or the General Partner or its affiliates who also serve as directors do not receive additional compensation for their service as directors.

Officers, employees, paid consultants, or advisors of us or the General Partner or its affiliates who also serve as directors do not receive additional compensation for their service as directors.

Other than Mr.

Hartman, our directors who are not officers, employees or paid consultants or advisors of us or the General Partner or its affiliates receive cash and equity based compensation for their services as directors.

Hartman, our directors who are not officers, employees, paid consultants, or advisors of us or the General Partner or its affiliates receive cash and equity-based compensation for their services as directors.

Our director compensation program is subject to revision by the Board from time to time.

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________________________

(1) Represents the grant date fair value of our Phantom Units, calculated in accordance with ASC 718.

(1) Represents the grant date fair value of our Phantom Units, calculated in accordance with ASC Topic 718.

For a detailed discussion of the assumptions utilized in coming to these values, please see Note 14 in Part II, Item 8 “Financial Statements and Supplementary Data”.

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

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.

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 2022 year.

Hartman was appointed to the Board pursuant to the Board Representation Agreement.

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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(ii) an annual cash retainer for acting as the Chairman of the Audit Committee and for acting as Chairman of the Compensation Committee;

(iii) an annual cash retainer for membership on the Audit Committee or Compensation Committee;

(iii) an annual cash retainer for membership on the Audit Committee and for membership on the Compensation Committee;

(iv) an undetermined fixed sum for membership on a special or conflicts committee;

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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, 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”);

Pursuant to the terms of an Equity Restructuring Agreement the Partnership entered into on January 15, 2018, with the General Partner and Energy Transfer Equity, L.P.

(the “Equity Restructuring Agreement”), 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.

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Energy Transfer LP (1) (2) 46,056,228 46.87 % — *

(3) 17,437,632 17.91 % — *

EIG Veteran Equity Aggregator, L.P.

(3) 29,883,926 23.40 % — *

(4) 16,675,717 16.97 % — *

Long (5) 610,581 * 10,144 *

Liuzzi 296,699 * — *

Pearl — * — *

Scheller 66,268 * — *

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Kimble 51,817 * 500 *

Liuzzi 353,319 * — *

Christopher R.

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Mason — * 744,056 *

Ramsey — * 568,077 *

Brett Smith — * 38,339 *

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

Warren, USA Compression GP, LLC, Energy Transfer Partners, L.L.C., Energy Transfer Partners GP, L.P.

and Energy Transfer Operating, L.P.

Warren, USA Compression GP, LLC, Energy Transfer Partners, L.L.C., Energy Transfer Partners GP, L.P., and Energy Transfer Operating, L.P.

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

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(2) Includes 8,000,000 common units held by USA Compression GP, LLC.

(3) Invesco Ltd.

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.

The principal business address of Invesco Ltd.

is 1555 Peachtree Street NE, Suite 1800, Atlanta GA 30309.

(3) EIG Veteran Equity Aggregator, L.P.

holds Warrants to acquire (i) 4,206,640 common units of the Partnership at an exercise price of $17.03 per common unit and (ii) 8,413,281 common units of the Partnership at an exercise price of $19.59 per common unit.

holds Warrants to acquire 8,413,281 common units of the Partnership at an exercise price of $19.59 per common unit.

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

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.

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.

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.

EIG owns 449,529 common units as a result of their exercise of Warrants to purchase common units with a strike price of $17.03 per common unit.

EIG also owns 420,664 Preferred Units, all of which are convertible or will be convertible within 60 days into 21,021,116 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.

Upon (1) exercise of the remaining 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 420,664 Preferred Units, EIG would have sole voting and dispositive power over 29,883,926 common units of the Partnership based on the Schedule 13D/A filed on May 2, 2022, with the SEC and our records.

The principal business address of EIG Veteran Equity Aggregator, L.P.

is 1700 Pennsylvania Ave NW, STE.

is 600 New Hampshire Ave NW, STE.

1200, Washington, DC 20037.

(4) Invesco Ltd.

has the sole power to dispose or to direct the disposition of and sole power to vote or to direct the vote of 16,675,717 common units based on a Schedule 13G/A filed on February 8, 2023, with the SEC.

Invesco Ltd., in its capacity as a parent holding

company to its investment advisers, may be deemed to beneficially own these 16,675,717 common units which are held of record by clients of Invesco Ltd.

The principal business address of Invesco Ltd.

is 1555 Peachtree Street NE, Suite 1800, Atlanta GA 30309.

(5) Includes 536,625 of our common units held directly by Mr.

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Long is the trustee.

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

Whitehurst holds 297,617 of Energy Transfer LP’s common units in a margin account.

(7) Includes our current directors and current executive officers.

Securities Authorized for Issuance Under Equity Compensation Plans

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(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.

(iv) updated the tax withholding provision of the LTIP;

and (v) extended the term of the LTIP until November 1, 2028.

The following table provides certain information with respect to the LTIP as of December 31, 2022:

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Services Agreement

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.

We entered into that certain Services Agreement with USAC Management, a wholly owned subsidiary of the General Partner, effective on January 1, 2013 (the “Services Agreement”), pursuant to which USAC Management provides to us and the General Partner management, administrative and operating services, and personnel to manage and operate our business.

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.

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.

On October 28, 2022, the Services Agreement was amended to extend its term to December 31, 2027.

The Services Agreement may be terminated at any time by (i) the Board upon 120 days’ written notice for any reason in its sole discretion or (ii) USAC Management upon 120 days’ written notice if:

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$ 15.7 million

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

$ 44.9 million

Conflicts of Interest

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Unless the resolution of a conflict is specifically provided for in the Partnership Agreement, the General Partner or the conflicts committee may consider any factors that it determines in good faith to be appropriate when resolving a conflict.

When the Partnership Agreement provides that someone act in good faith, it requires that person to reasonably believe he is acting in the best interests of the Partnership.

Partnership Agreement provides that someone act in good faith, it requires that person to reasonably believe he is acting in the best interests of the Partnership.

Please read Part I, Item 1A “Risk Factors – Risks Inherent in an Investment in Us”.

Procedures for Review, Approval, and Ratification of Related Person Transactions

If a conflict or potential conflict of interest arises between the General Partner and its affiliates, including Energy Transfer, on the one hand and the Partnership and its limited partners, on the other hand, the resolution of any such conflict or potential conflict is addressed as described under “Conflicts of Interest.”

The Audit Committee reviews and considers related party transactions with affiliates of Energy Transfer for compression and related services.

The Audit Committee has authorized the General Partner’s management to enter into transactions for compression and related services with entities affiliated with Energy Transfer on arms-length terms taking into account then-current market conditions applicable to the services to be provided, and any such transaction shall be deemed approved by the Audit Committee.

If other conflicts or potential conflicts of interest arises between the General Partner and its affiliates, including Energy Transfer, on the one hand and the Partnership and its limited partners, on the other hand, the resolution of any such conflict or potential conflict is addressed as described under “Conflicts of Interest.”

Pursuant to the Partnership’s Code of Business Conduct and Ethics and Corporate Governance Guidelines, directors, officers, and employees are required to disclose any situations that reasonably would be expected to give rise to a conflict of interest and report it to their supervisor, the Partnership’s general counsel, or the Board, as appropriate.

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001-35779) filed on April 6, 2018)

4.9 Description of the USA Compression Partners, LP Common Units (incorporated by reference to Exhibit 4.10 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.

001-35779) filed on February 18, 2020)

4.9* Description of the USA Compression Partners, LP Common Units

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.

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001-35779) filed on February 16, 2021)

10.6† Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims dated August 23, 2022, with Matthew C.

Liuzzi (incorporated by reference to Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10-Q (File No.

001-35779) filed on November 1, 2022)

10.7 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 7, 2017)

10.9 Amendment No.

2 to Services Agreement, dated effective as of October 31, 2022, by and among USA Compression Partners, LP, USA Compression GP, LLC and USA Compression Management Services, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q (File No.

001-35779) filed on November 1, 2022)

10.10† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom Unit Agreement (incorporated by reference to Exhibit 10.8 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No.

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(ii) our Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020;

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

(iii) our Consolidated Statements of Changes in Partners’ Capital (Deficit) for the years ended December 31, 2022, 2021, and 2020;

(iv) our Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020;

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Long (Principal Executive Officer)

/s/ Matthew C.

Liuzzi Vice President, Chief Financial Officer and Treasurer

Liuzzi (Principal Financial Officer)

/s/ Michael C.

Pearl Vice President, Chief Financial Officer and Treasurer

Pearl (Principal Financial Officer)

Tracy Owens Vice President of Finance and Chief Accounting Officer

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Mason Director

/s/ Matthew S.

Ramsey Director

Brett Smith Director

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Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020

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

Consolidated Statement s of Changes in Partner s ’ Capital (Deficit) for the years ended December 31, 2022, 2021 , and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020

Notes to Consolidated Financial Statements

Note 1 – Organization and Description of Business

Note 2 – Basis of Presentation and Accounting Policies

Note 3 – Trade Accounts Receivable

Note 4 – Inventories

Note 5 – Property and Equipment, Identifiable Intangible Assets, and Goodwill

Note 6 – Other Current Liabilities

Note 7 – Lease Accounting

Note 8 – Income Tax Expense (Benefit)

Note 9 – Long-Term Debt

Note 10 – Preferred Units

Note 11 – Partners’ Capital (Deficit)

Note 12 – Revenue Recognition

Note 13 – Transactions with Related Parties

Note 14 – Unit-Based Compensation

Note 15 – Employee Benefit Plans

Note 16 – Commitments and Contingencies

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, 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”).

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, 2022 and 2021, the related consolidated statements of operations, changes in partners’ capital (deficit), and cash flows for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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Cash and cash equivalents $ 35 $ —

Accounts receivable:

Trade, net of allowances for credit losses of $ 2,057 and $ 4,982 , respectively

Accounts receivable, net of allowances for credit losses of $ 1,164 and $ 2,057 , respectively

83,822 68,214

Other 39 3,707

Related-party receivables 52 44,941

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Total assets $ 2,665,724 $ 2,767,979

Liabilities, Preferred Units and Partners’ Capital

Liabilities, Preferred Units, and Partners’ Capital (Deficit)

Current liabilities:

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Preferred Units 477,309 477,309

Partners’ capital:

Partners’ capital (deficit):

Common units, 98,228 and 97,345 units issued and outstanding, respectively

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Warrants 8,812 13,979

Total partners’ capital 101,108 337,655

Total liabilities, Preferred Units and partners’ capital $ 2,767,979 $ 2,948,700

Total partners’ capital (deficit) ( 116,299 ) 101,108

Total liabilities, Preferred Units, and partners’ capital (deficit) $ 2,665,724 $ 2,767,979

See accompanying notes to consolidated financial statements.

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distributions on Preferred Units ( 48,750 ) ( 48,750 ) ( 48,750 )

Net loss attributable to common and Class B unitholders’ interests $ ( 38,471 ) $ ( 643,482 ) $ ( 9,618 )

Net loss attributable to:

Common units $ ( 38,471 ) $ ( 643,482 ) $ ( 1,774 )

Class B Units $ — $ — $ ( 7,844 )

Net loss attributable to common unitholders’ interests $ ( 18,432 ) $ ( 38,471 ) $ ( 643,482 )

Weighted average common units outstanding – basic and diluted 97,780 97,068 96,816

Weighted average Class B Units outstanding – basic and diluted — — 3,681

Basic and diluted net loss per common unit $ ( 0.19 ) $ ( 0.40 ) $ ( 6.65 )

Basic and diluted net loss per Class B Unit $ — $ — $ ( 2.13 )

Distributions declared per common unit $ 2.10 $ 2.10 $ 2.10

Distributions declared per common unit for respective periods $ 2.10 $ 2.10 $ 2.10

See accompanying notes to consolidated financial statements.

USA COMPRESSION PARTNERS, LP

Consolidated Statements of Changes in Partners’ Capital

Consolidated Statements of Changes in Partners’ Capital (Deficit)

(in thousands)

Limited Partners

Common Units Class B Units Warrants Total

Common Units Warrants Total

Partners’ capital ending balance, December 31, 2019

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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

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Unit-based compensation for equity classified awards 252 — 252

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

Net loss attributable to common unitholders’ interests ( 18,432 ) — ( 18,432 )

Partners’ capital ending balance, December 31, 2021

Partners’ capital (deficit) ending balance, December 31, 2022

$ ( 125,111 ) $ 8,812 $ ( 116,299 )

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Impairment of goodwill — — 619,411

Changes in assets and liabilities, net of effects of business combination:

Changes in assets and liabilities:

Accounts receivable and related-party receivables, net 29,980 145 23,542

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Proceeds from revolving credit facility 844,549 697,679 777,472

Proceeds from issuance of senior notes — — 750,000

Payments on revolving credit facility ( 714,935 ) ( 655,147 ) ( 706,384 )

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Net cash used in financing activities ( 130,610 ) ( 226,239 ) ( 188,107 )

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

Increase (decrease) in cash and cash equivalents 35 ( 2 ) ( 8 )

Cash and cash equivalents, beginning of year — 2 10

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Transfers from inventories to property and equipment $ 22,329 $ 10,793 $ 17,435

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

Financing costs included in accounts payable and accrued liabilities $ 391 $ 115 $ 18

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

Changes in capital expenditures included in accounts payable and accrued liabilities $ 6,507 $ 720 $ ( 8,557 )

Changes in financing costs included in accounts payable and accrued liabilities $ ( 265 ) $ 391 $ 115

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

See accompanying notes to consolidated financial statements.

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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.

Through our operating subsidiaries, we provide compression services to customers under fixed-term contracts 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.

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.

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.

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All intercompany balances and transactions have been eliminated in consolidation.

Our common units trade on the New York Stock Exchange under the ticker symbol “USAC”.

Our common units trade on the NYSE under the ticker symbol “USAC”.

USA Compression Management Services, LLC (“USAC Management”), a wholly owned subsidiary of the General Partner, performs certain management and other administrative services for us, such as accounting, corporate development, finance, and legal.

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Basis of Presentation

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

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

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

Our consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts in these consolidated financial statements and the accompanying results.

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

Significant Accounting Policies

Cash and Cash Equivalents

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Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount.

Trade accounts receivable are recorded at their invoiced amounts.

Allowance for Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“Topic 326”):

Measurement of Credit Losses on Financial Instruments .

On January 1, 2020, we adopted Topic 326 using the modified retrospective approach, which was effective for interim and annual reporting periods beginning on or after December 15, 2019.

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

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

Due to the short-term nature of our trade accounts receivable, we consider the amortized cost of trade accounts receivable to equal the receivable’s carrying amounts, excluding the allowance for credit losses.

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:

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

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

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.

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 financial strength of our customers by reviewing the aging of their receivables owed to us, 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.

Inventories consist of serialized and non-serialized parts primarily used 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 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.

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

Property and Equipment

Property and equipment are carried at cost except for (i) certain acquired assets which are recorded at fair value on their respective acquisition dates and (ii) impaired assets which are recorded at fair value on the last impairment evaluation date for which an adjustment was required.

Property and equipment are carried at cost except for (i) certain acquired assets which are recorded at fair value on their respective acquisition dates and (ii) impaired assets which are recorded at fair value as of the last impairment evaluation date for which an adjustment was required.

Overhauls and major improvements that increase the value or extend the life of compression equipment are capitalized and depreciated over three to five years .

Ordinary maintenance and repairs are charged to cost of operations, exclusive of depreciation and amortization.

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

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 within our Consolidated Statements of Operations in the period of sale or disposition.

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 $ 0.9 million, $ 0.2 million, and $ 0.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Impairments of Long-Lived Assets

Long-lived assets with recorded values that are not expected to be recovered through future cash flows are written-down to estimated fair value.

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 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.

Impairment of Long-Lived Assets

Long-lived assets with recorded values that are not expected to be recovered from future cash flows are written-down to estimated fair value.

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

The most common circumstance requiring compression units to be evaluated for impairment occurs 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 the asset’s carrying value exceeds the sum of the undiscounted cash flows expected to be generated from the use and eventual disposition of the asset.

If the carrying value of the long-lived asset exceeds the sum of the undiscounted cash flows associated with the asset, an impairment loss equal to the amount of the carrying value exceeding the fair value of the asset is recognized.

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.

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 that 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 continue using.

In the first quarter of 2020, we determined that the impairment of our goodwill was an indicator of potential impairment of the carrying amount of our long-lived assets.

Accordingly, we performed a quantitative impairment test of our long-lived assets, by which we determined that they were not also impaired.

Accordingly, we performed a quantitative impairment test of our long-lived assets, by which we determined that they were also not impaired.

No triggering events have been identified subsequent to the first quarter of 2020.

Refer to Note 5 for more detailed information about impairment charges during the years ended December 31, 2022, 2021, and 2020.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Identifiable Intangible Assets

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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.

In the first quarter of 2020, we determined that the impairment of our goodwill was an indicator of potential impairment of the carrying amount of our identifiable intangible assets.

Accordingly, we performed a quantitative impairment test of our identifiable intangible assets, by which we determined that they were not also impaired.

Accordingly, we performed a quantitative impairment test of our identifiable intangible assets, by which we determined that they also were not impaired.

No triggering events have been identified subsequent to the first quarter of 2020.

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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, 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.

We recorded a $ 619.4 million goodwill impairment for the year ended December 31, 2020, which reduced our goodwill balance to zero.

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

Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied;

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

generally, this occurs with the provision of services or the transfer of goods.

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

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Refer to Note 12 for more detailed information about revenue recognition for the years ended December 31, 2022, 2021, and 2020.

We are organized as a partnership for U.S.

USA Compression Partners, LP is organized as a partnership for U.S.

federal and state income tax purposes.

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

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.

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

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

Texas Margin Tax impacts are included within our 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 any resulting tax impacts are included within our consolidated financial statements.

Refer to Note 8 for more detailed information about the Texas Margin Tax for the years ended December 31, 2022, 2021, and 2020.

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Fair-Value Measurements

Accounting standards on fair value measurements establish a framework for measuring fair value and stipulate disclosures about fair value measurements.

Accounting standards applicable to fair-value measurements establish a framework for measuring fair value and stipulate disclosures about fair-value measurements.

The standards apply to recurring and non-recurring financial and non-financial assets and liabilities that require or permit fair-value measurements.

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

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,

As of December 31, 2022, and 2021, our financial instruments primarily consisted 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.

Our revolving credit facility applies floating interest rates to amounts drawn under the facility;

therefore, the carrying amount of our revolving credit facility approximates its fair value.

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.

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Nonrecurring Fair-Value Measurements

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;

which together indicated the fair value of the reporting unit was less than its carrying amount as of March 31, 2020.

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, which together indicated the fair value of the reporting unit was less than its carrying amount as of March 31, 2020.

We performed a quantitative impairment test as of March 31, 2020 that resulted in a goodwill impairment of $ 619.4 million for the year ended December 31, 2020.

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(3) Trade Accounts Receivable

The allowance for credit losses, which was $ 2.1 million and $ 5.0 million as of December 31, 2021 and 2020, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

The allowance for credit losses, which was $ 1.2 million and $ 2.1 million as of December 31, 2022, and 2021, respectively, represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance.

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

Allowance for Credit Losses

Balance, December 31, 2019 $ 2,479

Balance as of December 31, 2020 $ 4,982

Current-period provision for expected credit losses ( 2,700 )

Writeoffs charged against the allowance ( 1,197 )

Balance, December 31, 2020 4,982

Write-offs charged against the allowance ( 264 )

Recoveries collected 39

Balance as of December 31, 2021 2,057

Current-period provision for expected credit losses ( 700 )

Writeoffs charged against the allowance ( 264 )

Write-offs charged against the allowance ( 203 )

Recoveries collected 10

Balance, December 31, 2021 $ 2,057

________________________

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

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.

Balance as of December 31, 2022 $ 1,164

Favorable market conditions for customers, attributable to sustained increases in commodity prices, was the primary factor supporting the recorded decrease to the allowance for credit losses for the year ended December 31, 2022.

Improved market conditions for customers resulting from improved commodity prices was the primary factor supporting the recorded decrease to the allowance for credit losses for the year ended December 31, 2021.

During the year ended December 31, 2020, we recorded $ 3.7 million to the current-period provision for expected credit losses.

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 supporting the recorded 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.

(4) Inventories

Components of inventories were as follows (in thousands):

Components of inventories are as follows (in thousands):

Serialized parts

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Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows:

Compression equipment, acquired new 25 years

Compression equipment, acquired used 5 - 25 years

Compression and treating equipment, acquired new 25 years

Compression and treating equipment, acquired used 5 - 25 years

Furniture and fixtures 3 - 10 years

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Depreciation expense on property and equipment was $ 207.3 million, $ 209.4 million, and $ 209.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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.

During the years ended December 31, 2022, and 2020, there were losses on disposition of assets of $ 1.5 million and $ 0.1 million, respectively.

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

For the years ended December 31, 2022, 2021, and 2020, we evaluated the future deployment of our idle fleet assets under then-existing market conditions and retired 15 , 26 , and 37 compressor units, respectively, for a total of approximately 3,200 , 11,000 , and 15,000 aggregate horsepower, respectively, that previously were used to provide compression services in our business.

As a result, we recorded impairments of compression equipment of $ 1.5 million, $ 5.1 million, and $ 8.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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

The primary circumstances supporting these impairments were:

(i) unmarketability of units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) excessive retrofitting costs that likely would prevent certain units from securing customer acceptance.

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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Relationships Trade Names Total

Gross balance at December 31, 2019 $ 485,162 $ 65,500 $ 550,662

Gross balance as of December 31, 2021 $ 485,162 $ 65,500 $ 550,662

Accumulated amortization ( 208,314 ) ( 37,937 ) ( 246,251 )

Net balance at December 31, 2020 $ 302,952 $ 30,839 $ 333,791

Gross balance at December 31, 2020 $ 485,162 $ 65,500 $ 550,662

Net balance as of December 31, 2021 $ 276,848 $ 27,563 $ 304,411

Gross balance as of December 31, 2022 $ 485,162 $ 65,500 $ 550,662

Accumulated amortization ( 234,418 ) ( 41,212 ) ( 275,630 )

Net balance at December 31, 2021 $ 276,848 $ 27,563 $ 304,411

Net balance as of December 31, 2022 $ 250,744 $ 24,288 $ 275,032

Amortization expense for the years ended December 31, 2022, 2021, and 2020, was $ 29.4 million, $ 29.4 million, and $ 29.4 million, respectively.

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

which together indicated the fair value of the reporting unit was less than its carrying amount as of March 31, 2020.

The expected amortization of the intangible assets for each of the five succeeding years is as follows:

Year Ending December 31,

2023 $ 29,380

We performed a quantitative goodwill impairment test as of March 31, 2020, and determined fair value using a weighted combination of the income approach and the market approach.

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

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

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

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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, 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 year ended December 31, 2019.

USA COMPRESSION PARTNERS, LP

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Accrued interest expense 32,763 30,850

Accrued payroll and benefits 8,054 8,416

Accrued unit-based compensation liability 17,743 13,280

Accrued capital expenditures 10,028 3,521

________________________

(1) Refer to Note 16 for further detailed information on the accrued sales tax contingencies.

(1) Refer to Note 16 for further information on the accrued sales tax contingencies.

(7) Lease Accounting

On January 1, 2019, we adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC Topic 842”).

ASC Topic 842 requires entities to recognize lease assets and liabilities on the balance sheet for all leases with a term of more than one year, including operating leases, which historically were not recorded on the balance sheet in accordance with the prior standard.

Lessee Accounting

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 eight years , some of which include options that permit renewals for additional periods.

Our leases have remaining lease terms of up to seven 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 (“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.

Operating leases are included in lease right-of-use (“ROU”) assets, accrued liabilities, and operating lease liabilities within our Consolidated Balance Sheets.

Finance leases are included in property and equipment, accrued liabilities, and other liabilities within our Consolidated Balance Sheets.

ROU lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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For certain equipment leases, such as office equipment, we account for the lease and non-lease components as a single-lease component.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Supplemental balance sheet information related to leases consisted of the following (in thousands):

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Other liabilities ( 1,211 ) ( 905 )

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Components of lease expense consisted of the following (in thousands):

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Total lease costs $ 6,168 $ 6,183 $ 6,585

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

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Finance leases 790 430 —

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Maturities of lease liabilities as of December 31, 2022, consisted of the following (in thousands):

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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 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.

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.

Maintenance revenue recognized for the years ended December 31, 2021, and 2020, was $ 0.3 million and $ 1.3 million, respectively.

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

Accounting Standards Codification (“ASC”) Topic 842 Leases 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.

Our contract operations services agreements meet these conditions, and we consider the predominant component to be the non-lease components, resulting in the ongoing recognition of revenue following ASC Topic 606 guidance.

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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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The tax effects of temporary differences related to property and equipment, identifiable intangible assets, and goodwill that gives rise to deferred tax assets (liabilities), included net within other liabilities, are as follows (in thousands):

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Deferred tax liabilities, net $ ( 4,253 ) $ ( 4,404 )

FASB ASC Topic 740 Income Taxes (“Topic 740”) provides guidance on measurement and recognition in accounting for income tax uncertainties and provides related guidance on derecognition, classification, disclosure, interest, and penalties.

As of December 31, 2021, we had no material unrecognized tax benefits (as defined in Topic 740).

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.

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.

ASC Topic 740 Income Taxes (“ASC Topic 740”) provides guidance on measurement and recognition in accounting for income tax uncertainties and provides related guidance on derecognition, classification, disclosure, interest, and penalties.

As of December 31, 2022, we had no material unrecognized tax benefits (as defined in ASC Topic 740).

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

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We do not intend to elect to apply these provisions for any tax return filed for partnership taxable years beginning before January 1, 2018.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(9) Long-term Debt

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Total senior notes, net 1,460,693 1,456,892

1,456,892 1,453,195

Revolving credit facility 645,956 516,342

516,342 473,810

Total long-term debt, net

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Revolving Credit Facility

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.

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, excluding real property and other customary exclusions;

(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).

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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 %.

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 Alternate 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 equal to 0.375 % per annum.

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.

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.

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.

• 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 most-recent fiscal quarter;

• a maximum funded debt-to-EBITDA ratio, determined as of the last day of each fiscal quarter with EBITDA annualized for the most-recent fiscal quarter, of (i) 5.50 to 1.00 through the third quarter of 2023 and (ii) 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 for 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.

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

As of December 31, 2021, we had outstanding borrowings under the Credit Agreement of $ 516.3 million, $ 1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 261.9 million.

As of December 31, 2022, we had outstanding borrowings under the Credit Agreement of $ 646.0 million, $ 954.0 million of availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 333.1 million.

The borrowing base consists of eligible accounts receivable, inventory, and compression units.

The largest component, representing 94 % of the borrowing base as of December 31, 2022, was eligible compression units.

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 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.

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

Eligible compression units

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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 for the year ended December 31, 2022, was 4.48 %, and our weighted-average interest rate under the Credit Agreement as of December 31, 2022, was 6.84 %.

There were no letters of credit issued under the Credit Agreement as of December 31, 2022.

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

The Credit Agreement is a “revolving credit facility” that includes a lockbox 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.

Amounts borrowed and repaid under the Credit Agreement may be re-borrowed.

Senior Notes 2027

On March 7, 2019, the Partnership and USA Compression Finance Corp.

(“Finance Corp”) co-issued the Senior Notes 2027.

The Senior Notes 2027 mature on September 1, 2027 and accrue interest from at the rate of 6.875 % per year.

On March 7, 2019, the Partnership and Finance Corp co-issued the Senior Notes 2027.

The Senior Notes 2027 mature on September 1, 2027 and accrue interest 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:

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:

Year Percentages

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

In connection with issuing the Senior Notes 2027, we incurred certain issuance costs in the amount of $ 13.3 million during the year ended December 31, 2019, which is amortized over the term of the Senior Notes 2027.

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’, 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.

The Exchange Notes 2027 are substantially identical to the Senior Notes 2027, except that the Exchange Notes 2027 have been registered with the SEC and do not contain the transfer restrictions, restrictive legends, registration rights or additional interest provisions of the Senior Notes 2027.

The Senior Notes 2027 and the 2027 Guarantees effectively are 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 subordinate to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2027.

Senior Notes 2026

On March 23, 2018, the Partnership and Finance Corp co-issued the Senior Notes 2026.

The Senior Notes 2026 mature on April 1, 2026 and accrue interest from March 23, 2018 at the rate of 6.875 % per year.

The Senior Notes 2026 mature on April 1, 2026 and accrue interest 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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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:

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2023 101.719 %

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

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.

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.

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.

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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.

The Exchange Notes 2026 are substantially identical to the Senior Notes 2026, except that the Exchange Notes 2026 have been registered with the SEC and do not contain the transfer restrictions, restrictive legends, registration rights or additional interest provisions of the Senior Notes 2026.

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.

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

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

Each of the Guarantors 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 of 1933, as amended (“Securities Act”).

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 of 1933, as amended.

Subsidiary Guarantors

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2026 (1) 1,370,956

Thereafter 750,000

(10) Preferred Units

Preferred Unit and Warrant Private Placement

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

________________________

(1) The Credit Agreement matures on December 8, 2026, except that if any portion of the 6.875 % Senior Notes 2026 are outstanding on December 31, 2025, the Credit Agreement will mature on December 31, 2025.

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.

(10) Preferred Units

Preferred Unit and Warrant Private Placement

We issued 500,000 Preferred Units with a face value of $ 1,000 per Preferred Unit and issued two tranches of Warrants to the holders of the Preferred Units, refer to Note 11 for further information on the Warrants.

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.

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

The Preferred Unitholders are entitled to receive cumulative quarterly cash distributions equal to $ 24.375 per Preferred Unit.

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

The holders of the Preferred Units are entitled to receive cumulative quarterly cash distributions equal to $ 24.375 per Preferred Unit.

As of December 31, 2022, and 2021, 500,000 Preferred Units were issued and outstanding.

We have declared and paid quarterly cash distributions per unit to our Preferred Unitholders of record as follows:

We have declared and paid per-unit quarterly cash distributions to the holders of the Preferred Units of record as follows:

Payment date Distribution per Preferred Unit

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On January 12, 2023, we declared a cash distribution of $ 24.375 per unit on our Preferred Units.

The distribution was paid on February 4, 2022 to unitholders of record as of the close of business on January 24, 2022.

The distribution was paid on February 3, 2023, to the holders of the Preferred Units of record as of the close of business on January 23, 2023.

Redemption and Conversion Features

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, 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

one third on or after April 2, 2021, two thirds on or after April 2, 2022, and 100 % on or after April 2, 2023.

The conversion rate for the Preferred Units is the quotient of (i) the sum of (a) $ 1,000 , plus (b) any unpaid cash distributions on the applicable Preferred Unit, divided by (ii) $ 20.0115 for each Preferred Unit.

As of December 31, 2022, 333,333 Preferred Units are convertible, at the option of the holder, into a maximum number of 16,657,088 common units.

As of April 2, 2023, all of the Preferred Units will be convertible, at the option of the holder, into a maximum number of 24,985,633 common units.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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 holders of the Preferred Units 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 holders of the Preferred Units 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, 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.

The Preferred Units are presented as temporary equity within 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.

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Refer to Note 13 for information about the rights EIG Veteran Equity Aggregator, L.P.

(along with its affiliated funds, “EIG”) has to designate one of the members of the Board.

(11) Partners’ Capital

Common and Class B Units

The change in common units and Class B Units outstanding were as follows:

Units outstanding

Common Class B

Number of units outstanding, December 31, 2018 89,983,790 6,397,965

(along with its affiliated funds, “EIG”) has to designate one of the members of the board of directors of the General Partner (the “Board”).

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(11) Partners’ Capital (Deficit)

The change in common units outstanding were as follows:

Common Units Outstanding

Number of common units outstanding, December 31, 2019 96,631,976

Vesting of phantom units 141,652

Issuance of common units under the DRIP 188,695

Conversion of Class B Units to common units 6,397,965 ( 6,397,965 )

Number of units outstanding, December 31, 2019 96,631,976 —

Number of common units outstanding, December 31, 2020 96,962,323

Vesting of phantom units

Issuance of common units under the DRIP

Number of units outstanding, December 31, 2020 96,962,323 —

Number of common units outstanding, December 31, 2021 97,344,707

Vesting of phantom units 224,386

Issuance of common units under the DRIP 124,255

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.

Exercise and conversion of warrants into common units 534,308

Number of common units outstanding, December 31, 2022 98,227,656

As of December 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.

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;

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

• 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.

Class B Units Conversion

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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Cash Distributions

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):

We have declared and paid per-unit quarterly distributions to our limited partner unitholders of record, including holders of our common and phantom units, as follows (dollars in millions, except distribution per unit):

Payment Date Distribution per

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On August 5, 2020, we filed a registration statement on Form S-3 for the issuance of up to 5,000,000 units under the DRIP.

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.

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 December 31, 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 prior to April 2, 2028.

The Warrants are presented within the equity section of the Consolidated Balance Sheets in accordance with GAAP as they are indexed to the Partnership’s common units, and require physical settlement or net settlement in the Partnership’s common units.

The Warrants were valued at issuance using the Black-Scholes-Merton model.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

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

The Warrants are presented within the equity section of the Consolidated Balance Sheets in accordance with GAAP as they are indexed to the Partnership’s own stock and require physical settlement or net share settlement.

The Warrants were valued at issuance using the Black-Scholes-Merton model.

Loss Per Unit

The computations of loss per unit are based on the weighted average number of participating securities outstanding during the period.

The computation of loss per unit is based on the weighted average number of participating securities, which includes our common units and certain equity-based awards outstanding during the applicable period.

Basic loss per unit is determined by dividing net income (loss) allocated to participating securities after deducting the amount distributed on Preferred Units, by the weighted average number of participating securities outstanding during the period.

Net loss attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period.

To the extent cash distributions exceed net loss attributable to unitholders for the period, the excess distributions are allocated to all participating securities outstanding based on their respective ownership percentages.

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

The classes of participating securities include common units, Class B Units prior to July 30, 2019, and certain equity-based compensation awards.

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

For the years ended December 31, 2021, 2020 and 2019, approximately 829,000 , 634,000 and 290,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted earnings per unit because the impact was anti-dilutive.

Our outstanding warrants are not applicable to the computation as they are not considered “in the money” for the years ended December 31, 2021, 2020 or 2019.

Loss attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period.

To the extent cash distributions exceed net income (loss) attributable to unitholders for the period, the excess distributions are allocated to all participating securities outstanding based on their respective ownership percentages.

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 they are considered “in the money.”

For the years ended December 31, 2022, 2021, and 2020, approximately 980,000 , 829,000 , and 634,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

For the year ended December 31, 2022, approximately 42,000 incremental “in the money” outstanding Warrants were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

For the years ended December 31, 2021 and 2020, our outstanding Warrants were not included in the computation as they were not considered “in the money” for either period.

(12) Revenue Recognition

Disaggregation of Revenue

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

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Contract operations revenue

Revenue from contracted compression, station, gas treating and maintenance services is recognized ratably under our fixed-fee contracts over the term of the contract as services are provided to our customers.

Initial contract terms typically range from six months to five years , however we usually 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.

We primarily enter into fixed-fee

Revenue from contracted compression, station, gas treating, and maintenance services is recognized ratably as services are provided to our customers under our fixed-fee contracts over the term of the contract.

Initial contract terms typically range from six months to five years .

However, we usually 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.

We primarily enter into fixed-fee contracts whereby our customers are required to pay our monthly fee even during periods of limited or disrupted throughput.

Services generally are billed monthly, one month in advance of the commencement of the service month, except for certain customers who are billed at the beginning of the service month, and payment generally is due 30 days after receipt of our invoice.

Amounts invoiced in advance are recorded as deferred revenue until earned, at which time they are recognized as revenue.

The amount of consideration we receive and revenue we recognize is based on the fixed-fee rate stated in each service contract.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

contracts whereby our customers are required to pay our monthly fee even during periods of limited or disrupted throughput.

Services are generally billed monthly, one month in advance of the commencement of the service month, except for certain customers who are billed at the beginning of the service month, and payment is generally due 30 days after receipt of our invoice.

Amounts invoiced in advance are recorded as deferred revenue until earned, at which time they are recognized as revenue.

The amount of consideration we receive and revenue we recognize is based upon the fixed fee rate stated in each service contract.

Variable consideration exists in select contracts when billing rates vary based on actual equipment availability or volume of total installed horsepower.

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We generally determine standalone service fees based on the service fees charged to customers or use expected cost plus margin.

The majority of our service performance obligations are satisfied over time as services are rendered at selected customer locations on a monthly basis and based upon specific performance criteria identified in the applicable contract.

The majority of our service performance obligations are satisfied over time as services are rendered at selected customer locations on a monthly basis and based on specific performance criteria identified in the applicable contract.

The monthly service for each location is substantially the same service month-to-month and is promised consecutively over the service contract term.

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Retail parts and services revenue

Retail parts and services revenue is earned primarily on freight and crane charges that are directly reimbursable by our customers and maintenance work on units at our customers’ locations that are outside the scope of our core maintenance activities.

Retail parts and services revenue primarily is earned on directly reimbursable freight and crane charges that are the financial responsibility of the customers and maintenance work on units at customer locations that are outside the scope of core maintenance activities.

Revenue from retail parts and services is recognized at the point-in-time the part is transferred or service is provided and control is transferred to the customer.

At such time, the customer has the ability to direct the use of the benefits of such part or service after we have performed our services.

We bill upon completion of the service or transfer of the parts, and payment is generally due 30 days after receipt of our invoice.

The amount of consideration we receive and revenue we recognize is based upon the invoice amount.

We bill upon completion of the service or transfer of the parts, and payment generally is due 30 days after receipt of our invoice.

The amount of consideration we receive and revenue we recognize is based on the invoice amount.

There are typically no material obligations for returns, refunds, or warranties.

Our standard contracts do not usually include material variable or non-cash consideration.

Contract Assets

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 December 31, 2021 or 2020.

Deferred Revenue

We record deferred revenue when cash payments are received or due in advance of our performance.

Components of deferred revenue were as follows:

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

Balance sheet location 2022 2021

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(1) We recognized $ 49.2 million of revenue during the year ended December 31, 2022, related to our deferred revenue balance as of December 31, 2021.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Performance Obligations

6 unchanged sentences

We provide compression services to entities affiliated with Energy Transfer, which as of December 31, 2022, 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):

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Revenue recognized from those entities affiliated with Energy Transfer on our Consolidated Statement of Operations were as follows (in thousands):

Year Ended December 31,

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Related-party revenues $ 15,655 $ 11,967 $ 12,372

$ 11,967 $ 12,372 $ 19,967

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.

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).

We had approximately $ 52,000 and $ 18,000 within related-party receivables on our Consolidated Balance Sheets as of December 31, 2022, and 2021, respectively, from these entities affiliated with Energy Transfer.

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

See Note 16 for more information related to these sales tax contingencies.

Pursuant to the Board Representation Agreement entered into by us, the General Partner, Energy Transfer, 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 issuable upon conversion of the Preferred Units and exercise of the Warrants).

(14) Unit-Based Compensation

Long-Term Incentive Plan

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.

In January 2013, 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.

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The General Partner’s executive officers, certain of its employees, and certain of its independent directors were granted these awards to incentivize them to help drive our future success and to share in the economic benefits of that success.

All employees with phantom units have a portion of their award settled in cash and a portion settled in common units upon vesting, unless otherwise approved by the Board.

All employees with phantom units have the option to have a portion of their award settled in cash and a portion settled in common units upon vesting, unless otherwise approved by the Board or a committee thereof.

The amount that can be settled in cash is in excess of the employee’s minimum statutory tax-withholding rate.

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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

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.

During the years ended December 31, 2022, 2021, and 2020, an aggregate of 603,365 , 638,903 , and 741,963 , respectively, phantom units (including the corresponding DERs) were granted under the LTIP to the General Partner’s executive officers, 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.

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As of December 31, 2022, and 2021, our total unit-based compensation liability was $ 17.7 million and $ 13.3 million, respectively.

During the years ended December 31, 2021, 2020 and 2019, we recognized $ 15.5 million, $ 8.4 million and $ 10.8 million of compensation expense associated with these awards, respectively, recorded in selling, general and administrative expense.

During the years ended December 31, 2022, 2021, and 2020, we recognized $ 15.9 million, $ 15.5 million, and $ 8.4 million of compensation expense associated with these awards, respectively, recorded in selling, general, and

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

administrative expense.

During the years ended December 31, 2022, 2021, and 2020, amounts paid related to the cash settlement of vested awards under the LTIP were $ 3.0 million, $ 3.2 million, and $ 1.1 million, respectively.

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The unrecognized compensation cost associated with phantom unit awards was an aggregate $ 24.1 million as of December 31, 2022.

We expect to recognize the unrecognized compensation cost for these awards on a weighted-average basis over a period of 2.7 years.

We expect to recognize the unrecognized compensation cost for these awards on a weighted-average basis over a period of approximately 2.6 years.

(15) Employee Benefit Plans

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(a) Major Customers

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.

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.

We did not have revenue from any single customer representing 10% or more of total revenues for the years ended December 31, 2022, 2021, or 2020.

As of December 31, 2022, one customer accounted for 13 % of our trade accounts receivable, net balance.

As of December 31, 2021, one customer accounted for 14 % of our trade accounts receivable, net balance.

(b) Litigation

4 unchanged sentences

The commitments as of December 31, 2022, were $ 159.3 million, all of which is expected to be settled within the next twelve months.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(d) Sales Tax Contingencies

2 unchanged sentences

We and others in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities.

We are currently protesting certain assessments made by the Oklahoma Tax Commission (“OTC”).

We currently are 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.

We estimate that the range of losses we could incur is from $ 0 to approximately $ 21.8 million, including penalties and interest.

As of December 31, 2021, we had 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 had challenged the applicability of the manufacturing exemption.

During August 2022, a Compromise and Settlement Agreement (“Agreement”) was entered into with the Comptroller for the period January 1, 2008, through March 31, 2018, related to such open audits.

Pursuant to an indemnification agreement between us and Energy Transfer, Energy Transfer paid all amounts due under the Agreement in full.

As a result, the $ 44.9 million accrued liability and $ 44.9 million related-party receivable from Energy Transfer was reduced to zero as of December 31, 2022.

(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.

The Partnership’s operations are subject to federal, state, and local laws, rules, and regulations regarding water quality, hazardous and solid waste management, air quality control, and other environmental matters.

These laws, rules, and regulations require the Partnership to conduct its operations in a specified manner and to obtain and comply with a wide variety of environmental registrations, licenses, permits, inspections, and other approvals.

Failure to comply with applicable environmental laws, rules, and regulations may expose the Partnership to significant fines, penalties, and/or interruptions in operations.

The Partnership’s environmental policies and procedures are designed to achieve compliance with such applicable laws and regulations.

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.

(17) Recent Accounting Pronouncements

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):

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

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

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 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.

The Partnership’s environmental policies and procedures are designed to achieve compliance with such applicable laws, rules, and regulations.

These evolving laws, rules, 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.

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