What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-01 compared with 2023-05-02 · 131 added, 68 removed, 385 unchanged (34% of the section changed)

10 unchanged sentences

Inventories 101,419 93,754

Derivative instrument 10,294 —

Prepaid expenses and other assets 10,147 8,784

2 unchanged sentences

Lease right-of-use assets 17,485 18,195

Derivative instrument, long term 3,040 —

Identifiable intangible assets, net 260,342 275,032

23 unchanged sentences

(in thousands, except per unit amounts)

Three Months Ended March 31,

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

2023 2022 2023 2022

Contract operations $ 196,982 $ 163,969 $ 385,521 $ 321,637

6 unchanged sentences

Selling, general, and administrative 14,950 13,914 34,051 29,179

Gain on disposition of assets ( 376 ) ( 179 )

Loss (gain) on disposition of assets 309 1,031 ( 67 ) 852

Impairment of compression equipment 10,273 — 11,464 432

3 unchanged sentences

Interest expense, net ( 42,045 ) ( 33,079 ) ( 81,835 ) ( 64,917 )

Gain on derivative instrument 14,550 — 14,550 —

Other 57 21 81 41

Total other expense ( 27,438 ) ( 33,058 ) ( 67,204 ) ( 64,876 )

3 unchanged sentences

distributions on Preferred Units ( 12,188 ) ( 12,188 ) ( 24,375 ) ( 24,375 )

Net loss attributable to common unitholders’ interests $ ( 1,246 ) $ ( 8,933 )

Weighted-average common units outstanding – basic and diluted 98,247 97,365

Basic and diluted net loss per common unit $ ( 0.01 ) $ ( 0.09 )

Net income (loss) attributable to common unitholders’ interests $ 11,396 $ ( 3,102 ) $ 10,150 $ ( 12,035 )

Weighted-average common units outstanding – basic 98,271 97,728 98,259 97,547

Weighted-average common units outstanding – diluted 99,694 97,728 99,738 97,547

Basic net income (loss) per common unit $ 0.12 $ ( 0.03 ) $ 0.10 $ ( 0.12 )

Diluted net income (loss) per common unit $ 0.11 $ ( 0.03 ) $ 0.10 $ ( 0.12 )

Distributions declared per common unit for respective periods $ 0.525 $ 0.525 $ 1.05 $ 1.05

3 unchanged sentences

(in thousands, except per unit amounts)

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

Common units Warrants Total

7 unchanged sentences

Partners’ capital (deficit) ending balance, March 31, 2023 ( 177,273 ) 8,812 ( 168,461 )

For the Three Months Ended March 31, 2022

Distributions and DERs, $ 0.525 per unit

( 51,617 ) — ( 51,617 )

Issuance of common units under the DRIP 423 — 423

Unit-based compensation for equity-classified awards 69 — 69

Net income attributable to common unitholders’ interests 11,396 — 11,396

Partners’ capital (deficit) ending balance, June 30, 2023 $ ( 217,002 ) $ 8,812 $ ( 208,190 )

For the Six Months Ended June 30, 2022

Common units Warrants Total

7 unchanged sentences

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

Distributions and DERs, $ 0.525 per unit

( 51,154 ) — ( 51,154 )

Issuance of common units under the DRIP 508 — 508

Unit-based compensation for equity-classified awards 65 — 65

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

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

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

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

5 unchanged sentences

Unit-based compensation expense 9,628 6,708

Deferred income tax benefit ( 15 ) ( 204 )

Gain on disposition of assets ( 376 ) ( 179 )

Deferred income tax expense (benefit) 19 ( 183 )

Loss (gain) on disposition of assets ( 67 ) 852

Change in fair value of derivative instrument ( 13,334 ) —

Impairment of compression equipment 11,464 432

20 unchanged sentences

Net cash used in financing activities ( 24,904 ) ( 86,412 )

Increase (decrease) in cash and cash equivalents ( 29 ) 15

Decrease in cash and cash equivalents ( 4 ) —

Cash and cash equivalents, beginning of period 35 —

2 unchanged sentences

Cash paid for interest, net of capitalized amounts $ 78,181 $ 60,239

Cash paid for income taxes $ 887 $ 798

Supplemental non-cash transactions:

3 unchanged sentences

Changes in financing costs included in accounts payable and accrued liabilities $ 6 $ ( 265 )

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

See accompanying notes to unaudited condensed consolidated financial statements.

13 unchanged sentences

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

Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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

26 unchanged sentences

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 $ 0.3 million and $ 0.1 million for the three months ended March 31, 2023, and 2022, respectively.

Capitalized interest was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively, and $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2022, respectively.

Impairment of Long-Lived Assets

5 unchanged sentences

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.

Refer to Note 5 for more detailed information about impairment charges during the three months ended March 31, 2023, and 2022.

Refer to Note 5 for more detailed information about impairment charges during the three and six months ended June 30, 2023, and 2022.

Identifiable Intangible Assets

4 unchanged sentences

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.

Revenue is measured at the amount of consideration we expect to receive

in exchange for providing services or transferring goods.

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

18 unchanged sentences

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

As of March 31, 2023, and December 31, 2022, our financial instruments primarily consisted of cash and cash equivalents, trade accounts receivable, trade accounts payable, and long-term debt.

As of June 30, 2023, and December 31, 2022, our financial instruments primarily consisted of cash and cash equivalents, trade accounts receivable, trade accounts payable, long-term debt, and, as of June 30, 2023, a derivative instrument.

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.

8 unchanged sentences

Fair value of Senior Notes 2027 710,625 725,625

The fair value of our derivative instrument, which is an interest-rate swap, was estimated based on inputs from actively quoted public markets, including interest-rate forward curves, and is considered a Level 2 measurement.

The following table summarizes the gross fair value of our interest-rate swap (in thousands):

2023 December 31,

Interest-rate swap $ 13,334 $ —

See Note 7 below for additional information on the interest-rate swap.

Operating Segment

1 unchanged sentence

(3) Trade Accounts Receivable

The allowance for credit losses, which was $ 1.2 million at both March 31, 2023, and December 31, 2022, represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance.

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

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 three months ended March 31, 2022.

The allowance for credit losses, which was $ 1.2 million at both June 30, 2023, and December 31, 2022, represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance.

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

(4) Inventories

23 unchanged sentences

Leasehold improvements 5 years

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

Three Months Ended March 31,

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

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

2023 2022 2023 2022

Depreciation expense $ 52,694 $ 51,614 $ 104,835 $ 103,334

Gain on disposition of assets 376 179

Loss (gain) on disposition of assets 309 1,031 ( 67 ) 852

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

For the three months ended March 31, 2023, and 2022, we retired six and ten compression units, respectively, representing approximately 8,700 and 1,400 of aggregate horsepower, respectively, that previously were used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 1.2 million and $ 0.4 million for the three months ended March 31, 2023, and 2022, respectively.

For the three and six months ended June 30, 2023, we retired 33 and 39 compression units, respectively, representing approximately 26,900 and 35,600 of aggregate horsepower, respectively, that previously were used to provide compression services in our business.

As a result, we recorded impairments of compression equipment of $ 10.3 million and $ 11.5 million for the three and six months ended June 30, 2023, respectively.

For the six months ended June 30, 2022, we retired 10 compression units representing approximately 1,400 of aggregate horsepower that previously were used to provide compression services in our business.

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

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

The primary circumstances supporting these impairments were:

6 unchanged sentences

Amortization expense ( 13,052 ) ( 1,638 ) ( 14,690 )

Net balance as of March 31, 2023 $ 244,218 $ 23,469 $ 267,687

Accumulated amortization of intangible assets was $ 283.0 million and $ 275.6 million as of March 31, 2023, and December 31, 2022, respectively.

Net balance as of June 30, 2023 $ 237,692 $ 22,650 $ 260,342

Accumulated amortization of intangible assets was $ 290.3 million and $ 275.6 million as of June 30, 2023, and December 31, 2022, respectively.

(6) Other Current Liabilities

4 unchanged sentences

Accrued capital expenditures 11,153 10,028

(7) Derivative Instrument

In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement.

The interest-rate swap’s notional principal amount is $ 700 million and has a mandatory termination date in April 2025.

Under the interest-rate swap, we pay a fixed interest rate of 3.785 % and receive floating interest rate payments that are indexed to the one-month SOFR.

We do not apply hedge accounting to our currently outstanding derivative.

Our derivative is carried on the unaudited condensed consolidated balance sheets at fair value and are classified as current or long-term depending on the expected timing of settlement, and gains and losses associated with the derivative instrument is recognized currently in gain on derivative instrument within the unaudited condensed consolidated statements of operations.

Cash flows related to cash settlements for the periods presented are classified as operating activities within the unaudited condensed consolidated statements of cash flows.

The following table summarizes the location and fair value of our derivative instrument on our unaudited condensed consolidated balance sheets (in thousands):

Balance Sheet Classification June 30,

2023 December 31,

Derivative instrument $ 10,294 $ —

Derivative instrument, long term 3,040 —

The following table summarizes the location and amounts recognized related to our derivative instrument within our unaudited condensed consolidated statements of operations (in thousands):

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

Income Statement Classification 2023 2022 2023 2022

Gain on derivative instrument $ 14,550 $ — $ 14,550 $ —

(8) Long-term Debt

15 unchanged sentences

restricted subsidiaries (subject to customary exceptions).

As of March 31, 2023, we had outstanding borrowings under the Credit Agreement of $ 709.1 million, $ 890.9 million of availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 374.5 million.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement for the three months ended March 31, 2023, was 7.15 %, and our weighted-average interest rate under the Credit Agreement as of March 31, 2023, was 7.38 %.

There were no letters of credit issued under the Credit Agreement as of March 31, 2023.

As of June 30, 2023, we had outstanding borrowings under the Credit Agreement of $ 750.4 million, $ 849.6 million of availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 327.6 million.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement for the six months ended June 30, 2023, was 7.40 %, and our weighted-average interest rate under the Credit Agreement as of June 30, 2023, was 7.74 %.

There were no letters of credit issued under the Credit Agreement as of June 30, 2023.

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

1 unchanged sentence

(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.

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

3 unchanged sentences

In addition, the Partnership may increase the applicable ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and 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.

As of March 31, 2023, we were in compliance with all of our covenants under the Credit Agreement.

As of June 30, 2023, we were in compliance with all of our covenants under the Credit Agreement.

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.

4 unchanged sentences

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

As of March 31, 2023, we were in compliance with such financial covenants under the 2026 Indenture.

As of June 30, 2023, we were in compliance with such financial covenants under the 2026 Indenture.

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

6 unchanged sentences

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

As of March 31, 2023, we were in compliance with such financial covenants under the 2027 Indenture.

As of June 30, 2023, we were in compliance with such financial covenants under the 2027 Indenture.

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

5 unchanged sentences

(9) Preferred Units

We had 500,000 Preferred Units outstanding as of March 31, 2023, and December 31, 2022, respectively, with a face value of $ 1,000 per Preferred Unit.

We had 500,000 Preferred Units outstanding as of June 30, 2023, and December 31, 2022, respectively, with a face value of $ 1,000 per Preferred Unit.

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

8 unchanged sentences

February 3, 2023 $ 24.375

May 5, 2023 24.375

Total 2023 distributions

Announced Quarterly Distribution

On April 13, 2023, we declared a cash distribution of $ 24.375 per unit on our Preferred Units.

The distribution will be paid on May 5, 2023, to the holders of the Preferred Units of record as of the close of business on April 24, 2023.

On July 13, 2023, we declared a cash distribution of $ 24.375 per unit on our Preferred Units.

The distribution will be paid on August 4, 2023, to the holders of the Preferred Units of record as of the close of business on July 24, 2023.

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

3 unchanged sentences

Cash distributions on Preferred Units ( 24,375 )

Balance as of March 31, 2023 $ 477,309

Balance as of June 30, 2023 $ 477,309

Redemption and Conversion Features

8 unchanged sentences

Issuance of common units under the DRIP 50,800

Number of common units outstanding, March 31, 2023 98,257,639

As of March 31, 2023, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer.

Number of common units outstanding, June 30, 2023 98,278,456

As of June 30, 2023, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer.

Cash Distributions

8 unchanged sentences

February 3, 2023 $ 0.525 $ 51.6 $ 1.1 $ 52.7

May 5, 2023 0.525 51.6 1.1 52.7

Total 2023 distributions

$ 1.05 $ 103.2 $ 2.2 $ 105.4

Announced Quarterly Distribution

On April 13, 2023, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on May 5, 2023, to common unitholders of record as of the close of business on April 24, 2023.

During the three months ended March 31, 2023, distributions of $ 0.6 million were reinvested under the DRIP resulting in the issuance of 29,983 common units.

As of March 31, 2023, and December 31, 2022, we had warrants outstanding to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit that may be exercised by the holders at any time prior to April 2, 2028.

Loss Per Unit

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.

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

On July 13, 2023, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on August 4, 2023, to common unitholders of record as of the close of business on July 24, 2023.

During the six months ended June 30, 2023, distributions of $ 1.0 million were reinvested under the DRIP resulting in the issuance of 50,800 common units.

As of June 30, 2023, and December 31, 2022, we had warrants outstanding to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit that may be exercised by the holders at any time prior to April 2, 2028.

On April 27, 2022, a 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.

Income (Loss) Per Unit

The computation of income (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 income (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.

Income (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 three months ended March 31, 2023, approximately 1.1 million and 477,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

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

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

Diluted income (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 income (loss) per unit, as they are not considered to be participating securities, but are included in the calculation of diluted income (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 three months ended June 30, 2023, approximately 1,177,000 and 246,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, represent the difference between our basic and diluted weighted-average common units outstanding.

For the six months ended June 30, 2023, approximately 1,118,000 and 361,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, represent the difference between our basic and diluted weighted-average common units outstanding.

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

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

Our outstanding warrants not “in the money” were excluded from the calculation for the three and six months ended June 30, 2022.

(11) Revenue Recognition

1 unchanged sentence

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Contract operations revenue $ 202,403 $ 167,853 $ 395,545 $ 329,339

2 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Services provided over time:

7 unchanged sentences

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

Balance sheet location March 31,

Balance sheet location June 30,

2023 December 31,

3 unchanged sentences

________________________________

(1) We recognized $ 53.0 million of revenue during the three months ended March 31, 2023, related to our deferred revenue balance as of December 31, 2022.

(1) We recognized $ 3.9 million and $ 56.9 million of revenue during the three and six months ended June 30, 2023, respectively, related to our deferred revenue balance as of December 31, 2022.

Performance Obligations

As of March 31, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 725.9 million.

As of June 30, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 814.4 million.

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

3 unchanged sentences

(12) Transactions with Related Parties

We provide compression services to entities affiliated with Energy Transfer, which as of March 31, 2023, owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

We provide natural gas compression and treating services to entities affiliated with Energy Transfer, which as of June 30, 2023, owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Related-party revenues $ 5,836 $ 3,887 $ 10,543 $ 7,705

We had approximately $ 246,000 and $ 52,000 of related-party receivables on our unaudited condensed consolidated balance sheets as of March 31, 2023, and December 31, 2022, respectively, from those entities affiliated with Energy Transfer.

We had approximately $ 2.9 million and $ 52 thousand of related-party receivables on our unaudited condensed consolidated balance sheets as of June 30, 2023, and December 31, 2022, respectively, from those entities affiliated with Energy Transfer.

(13) Commitments and Contingencies

(a) Major Customers

We did not have revenue from any single customer representing 10% or more of total revenues for the three months ended March 31, 2023, or 2022.

One customer accounted for approximately 10 % of total revenues for the three and six months ended June 30, 2023.

No customer accounted for 10% or more of total revenues for the three and six months ended June 30, 2022.

(b) Litigation

3 unchanged sentences

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

The commitments as of March 31, 2023, were $ 144.7 million, all of which is expected to be settled by year-end 2023.

(d) Sales Tax Contingency

The commitments as of June 30, 2023, were $ 121.4 million, all of which is expected to be settled within the next twelve months and $ 95.7 million of which is expected to be settled by year-end 2023.

(d) Tax Contingencies

Our compliance with state and local sales tax regulations is subject to audit by various taxing authorities.

4 unchanged sentences

We estimate that the range of losses we could incur is from $ 0 to approximately $ 26.0 million, including penalties and interest.

federal income tax returns for the 2019 and 2020 tax years currently are under examination by the Internal Revenue Service (“IRS”).

The IRS has issued preliminary partnership examination changes, along with imputed underpayment computations, for the 2019 and 2020 tax years.

Under the Bipartisan Budget Act, there are several procedural steps, including an appeals process, to complete before a final imputed underpayment, if any, is determined.

Based on to-date discussions with the IRS, we estimate a potential range of loss from a final imputed underpayment of $ 0 to approximately $ 25 million, including interest, for potential adjustments resulting from the IRS examination.

Once a final partnership imputed underpayment, if any, is determined, our General Partner may either elect to pay the imputed underpayment (including any applicable penalties and interest) directly to the IRS or, if eligible, issue a revised information statement to each unitholder, and former unitholder, with respect to an audited and adjusted return.

(e) Environmental

4 unchanged sentences

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.

(13) Subsequent Event

In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement.

The interest-rate swap’s notional principal amount is $ 700 million and has a mandatory termination date of April 2025.

Under the interest-rate swap, we pay a fixed interest rate of 3.785 % and receive floating interest rate payments that are indexed to the one-month SOFR.

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

What changed 10-Q

Item 1. Financial Statements