What changed in this filing

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Item 9A. Controls and Procedures

2024-02-13 compared with 2023-02-14 · 542 added, 464 removed, 1800 unchanged (36% of the section changed)

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Other Information

During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed the Company of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, except as follows:

• On November 13, 2023 , Eric D.

Long , our President and Chief Executive Officer and Director , adopted an equity trading plan in accordance with Rule 10b5-1(c)(1) under the Exchange Act.

The plan provides for the sale of up to a maximum of 196,859 of our common units.

The first trade under the plan will not occur until February 16, 2024 at the earliest, and the plan will terminate on or before November 8, 2024.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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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 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”).

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

EIG Management has designated Matthew S.

Hartman to serve on the Board.

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

The Board is comprised of eight members, all of whom were designated by Energy Transfer.

Pursuant to a Board Representation Agreement (the “Board Representation Agreement”) among us, the General Partner, Energy Transfer, EIG Veteran Equity Aggregator, L.P.

(along with its affiliated funds, “EIG”), and EIG Management Company, LLC (“EIG Management”), entered into on April 2, 2018 (the “Transactions Date”) in connection with our private placement to EIG and FS Specialty Lending Fund (formerly known as FS Energy and Power Fund) (“FSSL”) of Preferred Units and warrants to purchase common units of the Partnership (the “Warrants”), EIG Management has the right to designate one member of the Board for so long as EIG and FSSL own, in the aggregate, more than 5% of the Partnership’s outstanding common units (taking into account the common units issuable upon conversion of the Preferred Units and exercise of the Warrants).

EIG Management has not designated a board member following the resignation of its previous designee, Matthew S.

Hartman, on November 20, 2023.

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

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

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

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

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

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Independent Directors .

The Board has determined that Matthew S.

Hartman, Glenn E.

Brett Smith, and William S.

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

The Board has determined that each of Glenn E.

Brett Smith, William S.

Waldheim are, and prior to his departure Matthew S.

Hartman was, an independent director under the standards established by the NYSE and the Exchange Act.

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 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.

from liquids production purchased by a subsidiary of Energy Transfer under agreements with well operators.

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

The Board determined that Mr.

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

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, during 2023 prior to Mr.

Hartman’s departure, EIG owned common units in us as a result of the exercise of the warrants.

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 did 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 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.

The Board’s Role in Risk Oversight

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The Audit Committee consists of Messrs.

Hartman, Joyce, Smith, and Waldheim, and Mr.

Joyce, Smith, and Waldheim, and prior to his departure, Mr.

Waldheim serves as chairman of the Audit Committee.

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

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

Joyce, Smith, Waldheim is, and prior to his departure Mr.

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

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

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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.

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.

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Long 65 President and Chief Executive Officer and Director

Pearl 51 Vice President, Chief Financial Officer and Treasurer

Tracy Owens 61 Vice President of Finance and Chief Accounting Officer

Scheller 60 Vice President and Chief Operating Officer

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Curia 68 Director

Hartman 42 Director

Joyce 66 Director

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Long a valuable member of the Board.

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.

Tracy Owens has served as Vice President of Finance and Chief Accounting Officer of the Company since April 2017, and was designated as our principal financial officer in October 2023.

Prior to joining us in 2017, Mr.

Owens served as Vice President and Chief Accounting Officer of Southcross Energy Partners GP, LLC, the general partner of Southcross Energy Partners, L.P.

(“Southcross”) from August 2015 until December 2016.

Before joining Southcross, Mr.

Owens served as Controller for Alon USA Energy, Inc.

(“Alon”) since 2006.

Prior to joining Alon, Mr.

Owens served as Controller for Hunt Refining Company from 1996 until 2006 and as Senior Manager at KPMG LLP from 1986 until 1996.

Owens received a BBA in Accounting from Baylor University in 1986.

He is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants.

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

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Curia was selected to serve on the Board due to the valuable perspective he brings from his extensive experience working as a human resources professional in the energy industry, and the insights he brings to the Board on matters such as succession planning, compensation, employee management, and acquisition evaluation and integration.

Hartman has served on the Board since April 2018.

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

Prior to joining EIG in 2014, Mr.

Hartman served in various roles within the Citigroup and UBS investment banking divisions, where he advised on mergers as well as equity and debt financings for midstream energy companies.

Hartman also previously worked in Ernst & Young’s tax practice.

Hartman received a B.B.A.

from Oklahoma Baptist University and an M.B.A.

from the University of Texas.

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

Joyce has served on the Board since April 2018.

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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.

Mason became the Executive Vice President and General Counsel of the general partner of Energy Transfer LP in December 2015, and 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.

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Waldheim has served on the Board since April 2018.

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

Waldheim also 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,

and Enbridge Energy Management, L.L.C.

from February 2016 through December 2018.

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

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

Whitehurst also served as

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

Prior to joining Energy Transfer LP, Mr.

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Long, President and CEO;

Pearl, Vice President, Chief Financial Officer and Treasurer;

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer;*

Pearl, 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.

Pearl left the Partnership effective October 5, 2023.

Effective October 6, 2023, Mr.

Owens was designated by the Board as the principal financial officer of the Company.

Compensation Philosophy and Objectives

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The Compensation Committee reviews and approves all compensation for the NEOs.

In determining the compensation for the NEOs, the Compensation Committee takes into account input from the CEO, for the compensation of the other NEOs.

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

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.

In determining the compensation for the NEOs, the Compensation Committee takes into account input and recommendations from the CEO with respect to the compensation of the other NEOs.

In this context, the CEO considers comparative compensation data and evaluates the individual performance of each of the other NEOs and their respective contributions to the Partnership.

The recommendations from the CEO 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, 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 periodically compares results for the annual base salary, annual 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 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.

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

In 2023, we engaged Meridian Compensation Partners, LLC (“Meridian”), the independent compensation advisor to Energy Transfer, to conduct a report on market information and compensation levels of our peer companies (the “2023 Meridian Report”).

The Compensation Committee utilized the 2023 Meridian Report when setting NEO compensation for the 2024 year and when determining the number of equity awards that should be granted to our NEOs in December 2023, which were based on the 2024 base salaries of the NEOs.

In connection with the engagement of Meridian for the 2023 Meridian Report, 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 2023 Meridian Report, our peer group included the following companies:

Company Ticker

Antero Midstream Corporation AM

Archrock, Inc.

Enerflex Ltd.

EnLink Midstream, LLC ENLC

Expro Group Holdings N.V.

Genesis Energy, L.P.

Helmerich & Payne, Inc.

Kodiak Gas Services, Inc.

NuStar Energy L.P.

Oil States International, Inc.

Pro Petro Holding Corp.

Select Water Solutions, Inc.

Summit Midstream Partners, LP SMLP

Sunoco LP SUN

TETRA Technologies, Inc.

Prior to this, in 2021, we had also engaged Meridian Compensation Partners, LLC to prepare a similar report.

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

As a result, the Compensation Committee relied on the results of the report completed in 2021 (as updated in 2022, the “2021 Meridian Report”), for information on base salary, bonus, and general compensation items for 2023 for the NEOs.

As discussed above, the Compensation Committee utilized the 2023 Meridian Report when determining the value of equity awards that should be granted to our NEOs in December 2023.

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.

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In connection with determining base salaries for each of the NEOs for 2023, 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 Compensation Committee provided each NEO with an increase to his base salary for the 2023 year.

The 2023 base salaries and 2022 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 711,330 683,972

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer 325,000 (1) (2)

Pearl, Former Vice President, Chief Financial Officer and Treasurer 416,000 (3) 400,000 (4)

Scheller, Vice President and Chief Operating Officer 385,000 360,500

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________________________

Pearl joined the Partnership effective August 9, 2022.

Owens’s base salary was increased to $325,000 effective October 9, 2023 in connection with his designation as principal financial officer of the Company.

The amount above reflects his annualized base salary for 2023 after this increase.

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

Owens in 2023.

Owens was not an NEO in 2022;

therefore, only his 2023 base salary is reported.

Pearl left the Partnership effective October 5, 2023.

The amount above reflects his annualized base salary for 2023.

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Pearl in 2023.

Liuzzi left the Partnership effective August 8, 2022.

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.

Liuzzi in 2022.

Pearl received $160,000 in base salary in 2022.

Annual Cash Incentive Compensation for 2023

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Payout Factor % of Total Annual Target Bonus

Adjusted EBITDA Budget Target Factor 30%

Adjusted EBITDA Budget Target Payout Factor 30%

Distributable Cash Flow Budget Target Payout Factor 30%

Leverage Ratio Budget Target Factor 30%

Leverage Ratio Budget Target Payout Factor 30%

Safety Budget Target Payout Factor 10%

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.

Each of the Adjusted EBITDA Budget Target Payout 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 2023 year, the Compensation Committee set the Adjusted EBITDA Budget Target at $501.7 million and the DCF Budget Target at $269.9 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.

The Leverage Ratio Budget Target Payout 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.

Leverage Ratio Factor

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Greater than 125% 0.00x

For the 2022 year, the Compensation Committee set the Safety Target at 0.70.

For the 2023 year, the Compensation Committee set the Safety Target (as defined in the Bonus Plan) at 0.90.

The establishment and amount of the bonus pool is 100% discretionary and subject to approval and/or adjustment by the Compensation Committee.

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For the 2023 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.

Owens, prior to the first quarter of the 2023 year, which was set as a percentage of the NEO’s base salary.

Owens’s Target Bonus was set by the Compensation Committee in October 2023.

For the bonus applicable to the 2023 year, the Target Bonus, as a percentage of base salary and as a dollar amount, is reflected in the table below.

1 unchanged sentence

Long, President and Chief Executive Officer 130 % 924,729

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

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer 50 % 150,362 (1)

Pearl, Former Vice President, Chief Financial Officer and Treasurer 100 % 416,000

Scheller, Vice President and Chief Operating Officer 100 % 385,000

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________________________

(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.

Owens’s Target Bonus was based three-quarters on his base salary of $292,632 and one-quarter on his increased base salary of $325,000.

The annual cash bonus pool targets for 2023 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.

Owens), 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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Long, President and Chief Executive Officer 924,729

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer 150,362 (2)

Scheller, Vice President and Chief Operating Officer 385,000

3 unchanged sentences

________________________

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

Pearl left the Partnership prior to the payout of the Target Bonuses for the year ended December 31, 2023.

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.

Pearl for 2023.

Owens’s Target Bonus was based three-quarters on his base salary of $292,632 and one-quarter on his base salary of $325,000.

Amounts received after October 2023 by the NEOs pursuant to the Bonus Plan are subject to certain clawback policies, and may be subject to repayment in part or in full if the Company is required to prepare an accounting restatement.

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 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.

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 Compensation Committee has only granted awards of phantom units with DERs under the LTIP.

The Compensation Committee acts as the administrator of the LTIP.

Each phantom unit (“Phantom Unit”) relates to one of our common units, and represents the right to receive (as applicable) a common unit or an amount of cash equal to the fair market value of a common unit (or a combination thereof) upon the vesting of such Phantom Unit pursuant to the LTIP, the applicable award agreement thereunder (“Phantom Unit Agreement”), and as determined by the Compensation Committee in its discretion.

Each phantom unit (“Phantom Unit”) represents the right to receive (as applicable) a common unit or an amount of cash equal to the fair market value of a common unit (or a combination thereof) upon the vesting of such Phantom Unit pursuant to the LTIP, the applicable award agreement thereunder (“Phantom Unit Agreement”), and as determined by the Compensation Committee in its discretion.

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, 2023.”

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).

Our current Phantom Unit Agreement provides for (i) 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) 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 NEO’s death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”), (iii) 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) 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 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.

Each NEO’s grant value is shown in the following table:

Long-Term Incentive Target Amounts for the Year Ended December 31, 2022

The target level of annual long-term incentive awards granted in December 2023 for each of the NEOs is expressed below as a percentage of the NEO’s base salary.

In determining the level of the December 2023 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 and other data contained in the 2023 Meridian Report, determined each of the NEOs’ long-term incentive targets.

Due to the fact that determinations were made in late 2023, the base salaries used for these calculations with respect to Messrs.

Long, Scheller, Porter and Kimble were

the then-determined base salaries set for the 2024 calendar year.

The Compensation Committee granted Mr.

Owens a set amount of long-term incentive awards, based on the factors described above.

Each NEO’s December 2023 grant value is shown in the following table:

Long-Term Incentive Target Amounts Awarded December 5, 2023

Name (1) Percentage of

1 unchanged sentence

Long, President and Chief Executive Officer 500 % 3,698,915

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer 62 % 200,000

Scheller, Vice President and Chief Operating Officer 200 % (2) 840,000

3 unchanged sentences

________________________

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

Pearl left the Partnership prior to the grant of the long-term incentive awards for 2023.

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

Liuzzi for 2022.

Pearl for 2023.

(2) In addition to the grant awarded to Mr.

Scheller in December 2023, the Compensation Committee awarded Mr.

Scheller an LTIP award on February 17, 2023 for 18,753 Phantom Units, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027.

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

On October 28, 2021, the Compensation Committee approved the default settlement method for Phantom Units of 50% in cash (valued based on the closing price on the NYSE of the Partnership’s common units on the date of vesting) and 50% in common units for all vesting of Phantom Units occurring during 2022.

However, the Compensation Committee also specified that if an employee affirmatively requests in writing that the percentage of cash settlement be set at a specific amount that is less than 50% (and such employee agrees to pay out of his or her own funds the amount of any required federal withholding to the extent that the cash portion is insufficient for the Partnership to withhold and pay such amounts on the employee’s behalf), the Board approves in advance such lesser cash settlement percentage.

Each Phantom Unit granted to an employee, including the NEOs, is granted in tandem with a corresponding DER, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (a) the number of Phantom Units granted to the grantee that remain outstanding and unvested as of the record date for the distribution on the Partnership’s common units for such quarter and (b) the quarterly distribution with respect to the Partnership’s common units.

On October 27, 2023, the Compensation Committee approved the current default settlement method for Phantom Units of 50% in cash (valued based on the closing price on the NYSE of the Partnership’s common units on the date of vesting) and 50% in common units for all vesting of Phantom Units occurring during 2024.

However, the Compensation Committee has also specified that employees may elect to decrease the percentage of this cash settlement.

If an employee affirmatively requests in writing that the percentage of cash settlement be set at a specific amount that is less than 50% (and such employee agrees to pay out of his or her own funds the amount of any required federal withholding to the extent that the cash portion is insufficient for the Partnership to withhold and pay such amounts on the employee’s behalf), the Compensation Committee approves in advance such lesser cash settlement percentage.

Each award of Phantom Unit granted to an employee, including the NEOs, is granted in tandem with a corresponding award of DERs, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (a) the number of Phantom Units granted under such award to the grantee that remain outstanding and unvested as of the record date for the distribution on the Partnership’s common units for such quarter and (b) the quarterly distribution with respect to the Partnership’s common units.

Awards granted pursuant to the LTIP are subject to certain clawback features, and the award may not vest or settle if we determine that the recipient committed certain acts of misconduct, as more particularly described in the LTIP.

Retention Phantom Unit Awards

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

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

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

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

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

Long in recognition of the importance of Mr.

Long to the Partnership’s long-term success and to encourage his retention by providing additional time-based compensation.

These Phantom Units are referred to as “Retention Units” and were issued pursuant to Retention Phantom Unit Agreements entered into between our General Partner and Mr.

Long on the grant date of the award (the “Retention Agreements”).

The Compensation Committee has not awarded any Retention Units to our NEOs subsequent to 2019.

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.

The Retention Agreements also provide for the vesting of 100% of the then-unvested Retention Units upon (i) Mr.

Long’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) Mr.

Long’s death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”).

In addition, Mr.

Long’s Retention Agreement provides for vesting of 40% of the outstanding, unvested Phantom Units if Mr.

Long’s Retention Agreements provide for vesting of 40% of the outstanding, unvested Phantom Units if Mr.

Long voluntarily retires at age 65 or older 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).

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

For additional information regarding the Retention Agreements, please see “– Potential Payments upon Termination or Change in Control-Retention Phantom Unit Agreements” below.

The vesting of the Retention Units are subject, in each case, to Mr.

Long’s continued employment with us until the relevant vesting date.

In accordance with the foregoing vesting schedule, as of December 31, 2023, the Retention Units granted to Mr.

Long in 2018 were fully vested.

For additional information regarding the remaining Retention Agreement, please see “– Potential Payments upon Termination or Change in Control-Retention Phantom Unit Agreement” below.

Benefit Plans and Perquisites

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

Separation Agreement

Pearl resigned from his positions on October 5, 2023.

In recognition of his service and contributions to the Partnership, the Compensation Committee approved a separation payment of $500,000 (the “Separation Payment”) to Mr.

The Separation Payment was paid in a lump sum and was contingent upon Mr.

Pearl’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-disparagement and confidentiality obligations.

Risk Assessment Related to Our Compensation Structure

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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.

We typically offer long-term equity incentives to employees at the director level or above, and we use Phantom Units rather than unit options for these equity awards because Phantom Units retain value even in a depressed market, so employees are less likely to take unreasonable risks to get or keep options “in-the-money.” Finally, the time-based vesting over three to five years for our currently outstanding long-term incentive awards ensures that our employees’ interests align with those of our unitholders with respect to our long-term performance.

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

We typically offer long-term equity incentives to employees at the director level or above, and we use Phantom Units rather than unit options for these equity awards because Phantom Units retain value even in a depressed market, so employees are less likely to take unreasonable risks to get or keep options “in-the-money.” Finally, the time-based vesting pursuant to our Phantom Unit agreement over three to five years for our currently outstanding long-term incentive awards ensures that our employees’ interests align with those of our unitholders with respect to our long-term performance.

Accounting and Tax Considerations

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During the requisite service period, compensation cost is recognized using the proportionate amount of the award’s fair value that has been earned through service to date.

Because we are a partnership and the General Partner is a limited liability company, section 162(m) of the Internal Revenue Code (the “Code”), which generally precludes public corporations from taking a tax deduction for individual compensation to certain of its executive officers in excess of $1 million, does not apply to the compensation paid to the NEOs and, accordingly, the Compensation Committee did not consider its impact in making the compensation recommendations discussed above.

Because we are a master limited partnership and the General Partner is a limited liability company, section 162(m) of the Internal Revenue Code (the “Code”), which generally precludes public corporations (as defined pursuant to regulations issued under section 162(m)) from taking a tax deduction for individual compensation to certain of its executive officers in excess of $1 million, does not apply to the compensation paid to the NEOs and, accordingly, the Compensation Committee did not consider its impact in making the compensation recommendations discussed above.

Compensation Committee Interlocks and Insider Participation

21 unchanged sentences

2021 664,050 — 2,735,885 854,965 1,504,151 5,759,051

Tracy Owens 2023 300,102 — 199,990 150,362 95,091 745,545

Vice President of Finance and Chief Accounting Officer

Pearl 2023 320,000 — — — 634,437 954,437

Vice President, Chief Financial Officer and Treasurer

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

Former Vice President, Chief Financial Officer and Treasurer 2022 160,000 — 1,335,984 158,904 14,991 1,669,879

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

Scheller 2023 385,000 — 1,224,995 385,000 377,573 2,372,568

9 unchanged sentences

________________________

(1) In 2022, Mr.

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

6 unchanged sentences

$ 1,638,603 $ 18,000 $ 16,500 $ 17,792 $ 8,919

Owens $ 80,086 — $ 15,005 — $ —

Pearl $ 115,249 — $ 16,000 — $ 3,188

Liuzzi $ 450,192 — $ 12,731 — $ 650

Scheller $ 360,099 — $ 16,500 — $ 974

1 unchanged sentence

$ 303,780 — $ 16,500 — $ 4,241

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.

Pearl left the Partnership effective October 5, 2023.

In connection with his departure, he received a separation payment of $500,000.

Grants of Plan-Based Awards during the Year Ended December 31, 2023

7 unchanged sentences

President and Chief Executive Officer 12/5/2023 10/27/2023 157,803 3,698,902

Tracy Owens 10/5/2023 150,362 177,427

Vice President of Finance and Chief Accounting Officer 12/5/2023 10/27/2023 8,532 199,990

Pearl 2/10/2023 416,000 490,880

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

1 unchanged sentence

Vice President and Chief Operating Officer 2/17/2023 2/17/2023 18,753 384,999

12/5/2023 10/27/2023 35,836 839,996

Christopher W.

7 unchanged sentences

Actual amounts earned for 2023 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 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.

(2) The Phantom Units granted to our NEOs on December 5, 2023 were granted pursuant to our LTIP and will vest incrementally, with 60% of the Phantom Units vesting on December 5, 2026, and the remaining 40% of the Phantom Units vesting on December 5, 2028.

The Phantom Units granted to Mr.

Scheller on February 17, 2023 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.

All 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 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 in 2023 will be forfeited, and the remainder will vest, at the time of retirement.

(3) The Phantom Units granted to our NEOs on December 5, 2023, and to Mr.

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

Scheller on February 17, 2023, 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.

The closing price of the Partnership’s common units was $20.53 on February 17, 2023, and $23.44 on December 5, 2023.

Outstanding Equity Awards as of December 31, 2023

4 unchanged sentences

Long, President and Chief Executive Officer

106,749 (1)(2) 2,084,808

83,527 (3)(4) 1,631,282

2019 Grants 83,527 (1)(2) 1,906,921

2020 Grant 85,408 (3) 1,949,865

1 unchanged sentence

2022 Grant 193,611 (5) 4,420,139

Pearl, Vice President, Chief Financial Officer and Treasurer

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

2023 Grant 157,803 (6) 3,602,642

Tracy Owens, Vice President of Finance and Chief Accounting Officer

2019 Grant 3,773 (2) 86,138

2020 Grant 4,822 (3) 110,086

2021 Grant 10,026 (4) 228,894

2022 Grant 8,165 (5) 186,407

2023 Grant 8,532 (6) 194,786

Scheller, Vice President and Chief Operating Officer

3 unchanged sentences

2022 Grant 41,916 (5) 956,942

2023 February Grant 18,753 (7) 428,131

2023 Grant 35,836 (6) 818,136

13 unchanged sentences

________________________

(1) On November 1, 2018, Mr.

(1) 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, 2023.

2 unchanged sentences

Long – 66,822;

Owens – 3,773;

Scheller – 12,578;

4 unchanged sentences

Long – 85,408;

Owens – 4,822;

Scheller – 19,694;

2 unchanged sentences

These remaining unvested Phantom Units will vest on December 5, 2025.

(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.

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

(4) Includes Phantom Units granted pursuant to the LTIP on December 5, 2021, to the NEOs as follows:

Long – 182,880;

Owens – 10,026;

Scheller – 48,195;

2 unchanged sentences

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 the following NEOs:

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

Long – 193,611;

Owens – 8,165;

Scheller – 41,916;

2 unchanged sentences

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

(6) Includes Phantom Units granted pursuant to the LTIP on December 5, 2023, to the NEOs as follows:

Long – 157,803;

Pearl – 50,952;

Owens – 8,532;

Scheller – 35,836;

2 unchanged sentences

The Phantom Units granted on December 5, 2023, vest incrementally, with 60% of the Phantom Units vesting on December 5, 2026, and the remaining 40% of the Phantom Units vesting on December 5, 2028.

(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.

Scheller was awarded an LTIP award on February 17, 2023 for 18,753 Phantom Units, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027.

Pearl left the Partnership effective October 5, 2023, at which time Mr.

Pearl’s unvested equity awards were forfeited.

(9) The market value of Phantom Units is calculated by multiplying $22.83, the closing price of the Partnership’s common units on December 29, 2023, the last trading day of 2023, by the number of Phantom Units outstanding.

5 unchanged sentences

Long, President and Chief Executive Officer 234,861 (1) 5,505,142

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

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

Tracy Owens, Vice President of Finance and Chief Accounting Officer 11,350 (2) 266,044

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

Scheller, Vice President and Chief Operating Officer 35,028 (3) 821,056

4 unchanged sentences

Long settled approximately 50% of his newly vested Phantom Units in cash in the amount of $2,752,583 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 62,646 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.

The remaining 117,430 vested Phantom Units were settled in our common units following such cash settlement.

Owens settled approximately 50% of his newly vested Phantom Units in cash in the amount of $133,045 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 5,674 vested Phantom Units were settled in our common units following such cash settlement.

Scheller settled approximately 50% of his newly vested Phantom Units in cash in the amount of $410,528 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 17,514 vested Phantom Units were settled in our common units following such cash settlement.

Porter settled approximately 50% of his newly vested Phantom Units in cash in the amount of $456,986 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 19,496 vested Phantom Units were settled in our common units following such cash settlement.

Kimble settled approximately 50% of his newly vested Phantom Units in cash in the amount of $494,607 (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 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.

The remaining 21,101 vested Phantom Units were settled in our common units following such cash settlement.

(6) The value realized on the vesting of Phantom Units was calculated by multiplying $23.44, the closing price of the Partnership’s common units on the date of vesting (December 5, 2023) by the number of Phantom Units vesting on such date.

Potential Payments upon Termination or Change in Control

1 unchanged sentence

All capitalized terms used in the following description but not defined therein will have the definitions set forth in the referenced document.

Retention Phantom Unit Agreements

On November 1, 2018, each of Messrs.

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

Retention Phantom Unit Agreement

On December 5, 2019, Mr.

Long 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, 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 (the “Release Payment”).

The Retention Agreement provides for the vesting of 100% of the then-unvested Retention Units upon (i) Mr.

Long’s termination of employment by the Company without Cause or for separation by Mr.

Long 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) Mr.

Long’s death or Disability (as defined under the LTIP and as described below).

In the event of Mr.

Long’s termination of employment by the Company without Cause or separation by Mr.

Long for Good Reason, provided that Mr.

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

Long will also be entitled to a severance payment intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes upon vesting (the “Release Payment”).

Pursuant to the terms of Mr.

Long’s Retention Agreements, upon Mr.

Long’s Retention Agreement, upon Mr.

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.

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;

(2) engagement by the NEO in any willful or deliberate misconduct which causes or is reasonably likely to cause economic damage to the Company, the Partnership or any of its and their subsidiaries or injury to the business reputation of the Company, the Partnership or its or their subsidiaries;

(3) engagement in any dishonest or fraudulent conduct by the NEO in the performance of the NEO’s duties on behalf of the Company, the Partnership or its or their subsidiaries, including, without limitation, the theft or misappropriation of funds or the disclosure of confidential or proprietary information;

(4) a knowing breach by the NEO of any fiduciary duty applicable to the NEO in performance of the NEO’s duties as contained in the organizational documents of the Company, the Partnership or any of its or their subsidiaries;

(5) the continuing failure or refusal of the NEO to satisfactorily perform the essential duties of the NEO for the Company;

As used in the Retention Agreement, “Cause” means (1) the commission by Mr.

Long of a criminal or other act that involves dishonesty, misrepresentation or moral turpitude;

(2) engagement by Mr.

Long in any willful or deliberate misconduct which causes or is reasonably likely to cause economic damage to the Company, the Partnership or any of its and their subsidiaries or injury to the business reputation of the Company, the Partnership or its or their subsidiaries;

(3) engagement in any dishonest or fraudulent conduct by Mr.

Long in the performance of Mr.

Long’s duties on behalf of the Company, the Partnership or its or their subsidiaries, including, without limitation, the theft or misappropriation of funds or the disclosure of confidential or proprietary information;

(4) a knowing breach by Mr.

Long of any fiduciary duty applicable to Mr.

Long in performance of Mr.

Long’s duties as contained in the organizational documents of the Company, the Partnership or any of its or their subsidiaries;

(5) the continuing failure or refusal of Mr.

Long to satisfactorily perform the essential duties of Mr.

Long for the Company;

(6) improper conduct materially prejudicial to the business of the Company, the Partnership or any of its or their subsidiaries;

(7) the material disregard or violation by the NEO of any policy or procedure of the Company;

(7) the material disregard or violation by Mr.

Long of any policy or procedure of the Company;

or (8) any other conduct materially detrimental (as determined in the sole reasonable judgment of the Company) to the Company’s, the Partnership’s or its or their subsidiaries’ business.

With respect to a termination for Cause pursuant to clauses (5), (6), (7), and (8) above, such termination will not be considered for Cause unless the NEO has been given written notice specifying in detail the conduct that allegedly constitutes grounds to terminate for Cause and an opportunity for 30 days after receipt of such notice to cure such grounds, if curable.

With respect to a termination for Cause pursuant to clauses (5), (6), (7), and (8) above, such termination will not be considered for Cause unless Mr.

Long has been given written notice specifying in detail the conduct that allegedly constitutes grounds to terminate for Cause and an opportunity for 30 days after receipt of such notice to cure such grounds, if curable.

Termination for Cause under clauses (1), (2), (3), or (4) above cannot be cured by the individual and no such notice to cure will be delivered.

“Good Reason” is defined under the Retention Agreements as the occurrence, during the Restricted Period (as defined in the Retention Agreement) and without the NEO’s prior written consent, of any one or more of the following:

(1) a material reduction in the NEO’s current title;

(2) a more than 10% reduction by the Company in the NEO’s rate of annual base salary, annual bonus target or annual long-term incentive target, each determined as of the grant date;

(3) a material diminution in the NEO’s authority, duties, reporting relationship or responsibilities that is inconsistent in a material and adverse respect with the NEO’s authority, duties, reporting relationship or responsibilities with the Partnership on the grant date, provided that such material diminution is also accompanied with any associated reduction in the NEO’s annual base salary, annual bonus target or annual long-term incentive target, determined based on the NEO’s highest annual base salary, annual bonus target or annual long-term incentive target during the most recent 365-day period prior to the date the change described in this clause (3) occurs;

or (4) a change of 50 miles or more in the geographic location of the NEO’s principal place of employment as of the grant date.

“Good Reason” is defined under the Retention Agreement as the occurrence, during the Restricted Period (as defined in the Retention Agreement) and without Mr.

Long’s prior written consent, of any one or more of the following:

(1) a material reduction in Mr.

Long’s current title;

(2) a more than 10% reduction by the Company in Mr.

Long’s rate of annual base salary, annual bonus target or annual long-term incentive target, each determined as of the grant date;

(3) a material diminution in Mr.

Long’s authority, duties, reporting relationship or responsibilities that is inconsistent in a material and adverse respect with Mr.

Long’s authority, duties, reporting relationship or responsibilities with the Partnership on the grant date, provided that such material diminution is also accompanied with any associated reduction in Mr.

Long’s annual base salary, annual bonus target or annual long-term incentive target, determined based on Mr.

Long’s highest annual base salary, annual bonus target or annual long-term incentive target during the most recent 365-day period prior to the date the change described in this clause (3) occurs;

or (4) a change of 50 miles or more in the geographic location of Mr.

Long’s principal place of employment as of the grant date.

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;

Long 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;

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

Further, no act or omission shall be “Good Reason” if the NEO has consented in writing to such act or omission.

Long’s termination of employment must occur within the 90 day period after the initial existence of the condition specified in such notice.

Further, no act or omission shall be “Good Reason” if Mr.

Long has consented in writing to such act or omission.

Employment Agreements

26 unchanged sentences

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.

“Good Reason” is defined in the 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.

“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.

5 unchanged sentences

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

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

A “Change in Control” as defined under the LTIP means the occurrence of any of the following events:

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

4 unchanged sentences

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

or in the event that an NEO is not covered, for whatever reason, under the Company’s or the Partnership’s or one of its subsidiaries’ long-term disability insurance policy or plan for employees or the Company’s or the Partnership’s or one of its subsidiaries’ does not maintain such a long-term disability insurance policy, “Disability” means a total and permanent disability within the meaning of Section 22(e)(3) of the Code;

or in the event that an NEO is not covered, for whatever reason, under the Company’s or the Partnership’s or one of its subsidiaries’ long-term disability insurance policy or plan for employees or the Company or the Partnership or one of its subsidiaries does not maintain such a long-term disability insurance policy, “Disability” means a total and permanent disability within the meaning of Section 22(e)(3) of the Code;

provided, however, that if a Disability constitutes a payment event with respect to any award which provides for the deferral of compensation and is subject to section 409A of the Code, then, to the extent required to comply with section 409A of the Code, the NEO must also be considered “disabled” within the meaning of section 409A(a)(2)(C) of the Code.

21 unchanged sentences

Release Payment under Retention Agreements (5) 60,827 60,827 — — —

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

Vice President, Chief Financial Officer and Treasurer

Totals 16,115,545 442,202 16,054,718 — 16,054,718

Vice President of Finance and Chief Accounting Officer

Salary — — — — —

1 unchanged sentence

Accelerated Vesting of Phantom Units (1) 806,310 — 806,310 — 806,310

1,429,088 — 1,429,088 — 1,429,088

Totals 806,310 — 806,310 — 806,310

Former Vice President, Chief Financial Officer and Treasurer

2 unchanged sentences

Accelerated Vesting of Phantom Units — — — — —

Accelerated Vesting of Retention Units — — — — —

Release Payment under Retention Agreements — — — — —

Totals — — — — —

Vice President and Chief Operating Officer

2 unchanged sentences

Accelerated Vesting of Phantom Units (1) 4,040,271 — 4,040,271 — 4,040,271

3,074,237 — 3,074,237 — 3,074,237

Totals 4,040,271 — 4,040,271 — 4,040,271

Christopher W.

Vice President, General Counsel and Secretary

380,035 380,035 20,035 20,035 —

Salary (7) 401,458 401,458 27,058 27,058 —

Bonus (8) 660,960 660,960 660,960 — —

1 unchanged sentence

Health and Welfare Plan Benefits (9) 28,072 28,072 — — —

4,142,134 1,034,345 3,757,734 20,035 3,107,789

Totals 4,631,857 1,090,490 4,229,385 27,058 3,541,367

Vice President, Human Resources

334,763 334,763 9,763 9,763 —

Salary (7) 364,000 364,000 26,000 26,000 —

Bonus (8) 596,700 596,700 596,700 — —

1 unchanged sentence

Health and Welfare Plan Benefits (9) 28,072 28,072 — — —

3,778,089 952,938 3,428,689 9,763 2,825,151

Totals 3,926,970 988,772 3,560,898 26,000 2,938,198

________________________

(1) In the event of the NEO’s cessation of service for any reason, other than as set forth below, 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.

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 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 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 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 Phantom Units would vest.

(2) The remaining Retention Agreement for Mr.

Long provides 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.

Long's separation was also due to voluntary retirement, 40% of his Phantom Units would vest, valued at $6,269,337.

Long's separation was also due to voluntary retirement, 40% of his Retention Units would vest, valued at $152,550.

(5) 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, 2023, for Mr.

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

Pearl left the Partnership effective October 5, 2023.

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

Pearl a separation payment of $500,000 (the “Separation Payment”).

The Separation Payment was paid in a lump sum and was contingent upon Mr.

Pearl also received $16,000 of earned but unpaid base salary as of October 5, 2023, the date of his departure, bringing the total amount received by Mr.

Pearl pursuant to his departure to $516,000.

(7) The listed salary for each of Messrs.

5 unchanged sentences

Porter and Kimble is his pro rata bonus awarded with respect to the year ended December 31, 2023, and his bonus awarded with respect to the year ended December 31, 2022.

(9) In the event of Mr.

Porter’s or Mr.

Kimble’s termination by the Company without Cause or by the NEO with Good Reason, he and his eligible dependents will be entitled to continued health insurance benefits for the Coverage Period, as follows:

(a) for the first 12 months of the Coverage Period, the Company will provide such health insurance coverage at its own expense (other than the NEO’s monthly cost-sharing contribution under the Company’s group health plan, as in effect at the time of the NEO’s Separation from Service);

(b) for the following six months of the Coverage Period, such health insurance coverage will be at the NEO’s sole expense;

and (c) for the final six months of the Coverage Period, the Company will be responsible for the proportion of the cost of such health insurance coverage that the NEO covered in the first 12 months of the Coverage Period;

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

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

(10) The Employment Agreements for each of Messrs.

Porter and Kimble provide that upon termination by the Company without Cause or by the NEO for Good Reason, the NEO is entitled to receive one times his base salary, payable in equal semi-monthly installments over the course of one year provided, that any such installment payments that would otherwise be paid prior to the Company’s first regular payroll date that occurs on or after the 60th day following the date of Employee’s Separation from Service (the “First Pay Date”) shall be paid on the First Pay Date.

Upon the death of Mr.

4 unchanged sentences

Porter or Mr.

Kimble, he (or his estate) will be entitled to the same bonus payment as if the death or Disability had not occurred.

Kimble, he (or his estate) will be entitled to his pro rata bonus awarded with respect to the year ended December 31, 2023, and his bonus awarded with respect to the year ended December 31, 2022.

(12) In the event of the termination of employment by any of the NEOs without Good Reason, the NEO will be entitled to all earned but unpaid annual base salary.

None of the NEOs had earned but unpaid annual base salary as of December 31, 2023.

(6) The NEOs are not entitled to a certain level of compensation in the event of continued employment following a Change in Control, but for purposes of this table it is assumed that the NEO would continue to receive a level of base salary, bonus, benefits, and other compensation in the event of continued employment following a Change in Control that is the same as, or similar to, the amounts shown in the Summary Compensation Table.

(13) The NEOs are not entitled to a certain level of compensation in the event of continued employment following a Change in Control, but for purposes of this table it is assumed that the NEO would continue to receive a level of base salary, bonus, benefits, and other

compensation in the event of continued employment following a Change in Control that is the same as, or similar to, the amounts shown in the Summary Compensation Table.

Accordingly, no additional amounts are shown for salary, bonus, or health and welfare plan benefits because those amounts would remain as in effect at the time of the Change in Control, and only the acceleration values of outstanding equity at the time of a Change of Control have been reflected.

(7) In the event of Mr.

Porter’s or Mr.

(b) for the following six months of the Coverage Period, such health insurance coverage will be at the NEO’s sole expense;

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

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, 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.

(10) Provided that Mr.

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

3 unchanged sentences

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 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.

For 2023, our last completed fiscal year:

5 unchanged sentences

• We determined that, as of December 31, 2023, our employee population consisted of approximately 822 individuals with all of these individuals located in the U.S.

This population consisted of our full-time employees, as we do not have any part-time employees, temporary employees, or seasonal workers.

This population consisted of our full-time employees, as we did not have any part-time employees, temporary employees or seasonal workers as of December 31, 2023.

• We selected December 31, 2023, as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner.

30 unchanged sentences

(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 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.

Joyce, Waldheim, and Smith, 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 2023 year.

Hartman was appointed to the Board pursuant to the Board Representation Agreement, and did not receive compensation for his service on the Board.

Hartman resigned from our Board on November 20, 2023.

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

26 unchanged sentences

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”);

(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.

4 unchanged sentences

• each NEO of the General Partner;

• all directors and executive officers of the General Partner as a group.

• all directors and current executive officers of the General Partner as a group.

As of February 8, 2024, there were 103,001,911 common units outstanding.

9 unchanged sentences

Beneficially Owned Percentage of

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

Energy Transfer LP (1) (2) 46,056,228 44.71 % N/A N/A

EIG Veteran Equity Aggregator, L.P.

(3) 29,883,926 23.40 % — *

(4) 16,675,717 16.97 % — *

(3) 19,339,427 15.81 % N/A N/A

(4) 12,526,020 12.16 % N/A N/A

ALPS Advisors, Inc.

(5) 8,772,895 8.52 % N/A N/A

Long (6) 577,841 * 10,144 *

Tracy Owens 24,909 * — *

Pearl (7) — * — *

3 unchanged sentences

Kimble 72,918 * 500 *

Liuzzi 353,319 * — *

Christopher R.

Curia — * 512,131 *

Hartman — * — *

Joyce 24,138 * — *

10 unchanged sentences

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”).

(collectively, the

“Energy Transfer Reporting Companies”).

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

1 unchanged sentence

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

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

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 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.

(3) EIG owns approximately 387,011 Preferred Units, which are convertible into 19,339,427 common units at the election of the holder.

Upon conversion of all 387,011 Preferred Units, EIG would have sole voting and dispositive power over 19,339,427 common units of the Partnership based on the Schedule 13D/A filed on January 26, 2024, with the SEC and our records.

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

3 unchanged sentences

has the sole power to dispose or to direct the disposition of and sole power to vote or to direct the vote of 12,526,020 common units based on a Schedule 13G/A filed on February 12, 2024, 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.

Invesco Ltd., in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own these 12,526,020 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.

is 1331 Spring Street NW, Suite 2500, Atlanta GA 30309.

(5) The Schedule 13G was filed jointly by ALPS Advisors, Inc., an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 (“AAI”) and Alerian MLP ETF, an investment company registered under the Investment Company Act of 1940 (“Alerian”).

AAI and Alerian have the shared power to dispose or to direct the disposition of and shared power to vote or to direct the vote of 8,772,895 common units based on a Schedule 13G filed on February 5, 2024, with the SEC.

AAI furnishes investment advice to certain investment companies (collectively, the “Funds”).

In its role as an investment advisor, AAI has voting and/or investment power over the common units owned by the Funds, and may be deemed to be the beneficial ownership of the common units held by the Funds.

All 8,772,895 common units are owned by the Funds and AAI disclaims beneficial ownership.

Alerian MLP ETF, one of the Funds to which AAI provides investment advice, has an interest of 8,772,895 common units, or 8.52% in us.

The principal business address of AAI and Alerian is 1290 Broadway, Suite 1000, Denver, CO 80203.

(6) Includes 503,885 of our common units held directly by Mr.

5 unchanged sentences

Long is the trustee.

(7) Based on information contained in our records as of October 5, 2023.

Whitehurst holds 328,617 of Energy Transfer LP’s common units in a margin account.

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

(9) Includes our directors and current executive officers.

Securities Authorized for Issuance Under Equity Compensation Plans

25 unchanged sentences

Any Phantom Unit settled in cash will not result in the actual delivery of a common unit.

Additionally, Phantom Units withheld to satisfy the exercise price or tax withholdings of an award and Phantom Units that are forfeited, cancelled, or otherwise terminate or expire without the actual delivery of common units will be available for delivery pursuant to other awards.

Additionally, Phantom Units withheld to satisfy the exercise price or tax withholdings of an award

and Phantom Units that are forfeited, cancelled, or otherwise terminate or expire without the actual delivery of common units will be available for delivery pursuant to other awards.

For more information about the LTIP, please see Note 15 in Part II, Item 8 “Financial Statements and Supplementary Data”.

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Transactions with Energy Transfer

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

We provide compression and related services to entities affiliated with Energy Transfer, which became a related party of ours on April 2, 2018.

As of December 31, 2023, Energy Transfer has ownership and control of the General Partner and ownership of approximately 46% of our limited partner interests (including the 8,000,000 common units owned by the General Partner).

We recognized $15.7 million in revenue from compression services from entities affiliated with Energy Transfer for the year ended December 31, 2022.

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

The following table summarizes payments, revenues and other receivables between us and Energy Transfer during 2022.

We recognized $21.7 million in revenue from compression and related services from entities affiliated with Energy Transfer for the year ended December 31, 2023.

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

The following table summarizes payments and revenues between us and Energy Transfer during 2023.

Transaction Explanation Amount/Value

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$ 96.7 million

Revenue for compression services Represents the aggregate amount of revenue recognized for providing compression services to entities affiliated with Energy Transfer for the full year 2022.

Revenue for compression and related services Represents the aggregate amount of revenue recognized for providing compression services to entities affiliated with Energy Transfer for the full year 2023.

$ 21.7 million

1 unchanged sentence

Conflicts of interest exist, and may arise in the future, as a result of the relationships 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 directors and officers of the General Partner have fiduciary duties to manage the General Partner in a manner beneficial to its owners.

The directors and officers of the General Partner have fiduciary duties to manage the General Partner in a manner beneficial to its

At the same time, the General Partner has a fiduciary duty to manage the Partnership in a manner beneficial to us and our unitholders.

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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.

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.

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.

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

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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)

10.6†* Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims dated October 5, 2023, with Michael C.

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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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1* USA Compression Partners, LP Executive Officer Incentive Compensation Clawback Policy

101* Interactive data files pursuant to Rule 405 of Regulation S-T:

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Long (Principal Executive 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

Tracy Owens (Principal Accounting Officer)

Tracy Owens (Principal Financial and Accounting Officer)

/s/ Christopher R.

1 unchanged sentence

Christopher R.

/s/ Matthew S.

Hartman Director

Joyce Director

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Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021

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

Consolidated Statements of Changes in Partners’ Capital (Deficit) for the years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021

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Note 4 – Inventories

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

Note 5 – Property and Equipment and Identifiable Intangible Assets

Note 6 – Other Current Liabilities

Note 7 – Lease Accounting

Note 8 – Derivative Instrument

Note 9 – Income Tax Expense (Benefit)

Note 9 – Long-Term Debt

Note 10 – Debt Obligations

Note 11 – Preferred Units

Note 11 – Partners’ Capital (Deficit)

Note 12 – Partners’ Deficit

Note 13 – Revenue Recognition

3 unchanged sentences

Note 17 – Commitments and Contingencies

Note 18 – Recent Accounting Pronouncements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

26 unchanged sentences

Consolidated Balance Sheets

(in thousands)

(in thousands, except unit amounts)

Current assets:

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Inventories 114,728 93,754

Derivative instrument 5,670 —

Prepaid expenses and other assets 10,617 8,784

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Total assets $ 2,736,760 $ 2,665,724

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

Liabilities, Preferred Units, and Partners’ Deficit

Current liabilities:

5 unchanged sentences

Operating lease liabilities 14,731 16,146

Derivative instrument, long term 4,466 —

Other liabilities 10,924 8,255

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Preferred Units 476,334 477,309

Partners’ capital (deficit):

Partners’ deficit:

Common units, 100,986,011 and 98,227,656 units issued and outstanding, respectively

1 unchanged sentence

Warrants — 8,812

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

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

Total partners’ deficit ( 293,285 ) ( 116,299 )

Total liabilities, Preferred Units, and partners’ deficit $ 2,736,760 $ 2,665,724

See accompanying notes to consolidated financial statements.

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Impairment of compression equipment 12,346 1,487 5,121

Impairment of goodwill — — 619,411

Total costs and expenses 614,197 535,305 491,773

Operating income (loss) 169,293 140,872 ( 464,852 )

Operating income 231,981 169,293 140,872

Other income (expense):

Interest expense, net ( 169,924 ) ( 138,050 ) ( 129,826 )

Gain on derivative instrument 7,449 — —

Other 127 91 107

Total other expense ( 162,348 ) ( 137,959 ) ( 129,719 )

Net income (loss) before income tax expense 31,334 11,153 ( 593,399 )

Net income before income tax expense 69,633 31,334 11,153

Income tax expense 1,365 1,016 874

Net income (loss) 30,318 10,279 ( 594,732 )

Net income 68,268 30,318 10,279

distributions on Preferred Units ( 47,775 ) ( 48,750 ) ( 48,750 )

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

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

Net income (loss) attributable to common unitholders’ interests $ 20,493 $ ( 18,432 ) $ ( 38,471 )

Weighted average common units outstanding – basic 98,634 97,780 97,068

Weighted average common units outstanding – diluted

100,675 97,780 97,068

Basic net income (loss) per common unit $ 0.21 $ ( 0.19 ) $ ( 0.40 )

Diluted net income (loss) per common unit $ 0.20 $ ( 0.19 ) $ ( 0.40 )

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

19 unchanged sentences

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 )

5 unchanged sentences

Exercise and conversion of warrants into common units 8,812 ( 8,812 ) —

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

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

Net income attributable to common unitholders’ interests 20,493 — 20,493

Partners’ deficit ending balance, December 31, 2023

$ ( 293,285 ) $ — $ ( 293,285 )

6 unchanged sentences

Cash flows from operating activities:

Net income (loss) $ 30,318 $ 10,279 $ ( 594,732 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 68,268 $ 30,318 $ 10,279

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 246,096 236,677 238,769

2 unchanged sentences

Unit-based compensation expense 22,169 15,894 15,523

Deferred income tax expense (benefit) ( 151 ) ( 42 ) 530

Deferred income tax benefit ( 52 ) ( 151 ) ( 42 )

Loss (gain) on disposition of assets ( 1,667 ) 1,527 ( 2,588 )

Change in fair value of derivative instrument ( 1,204 ) — —

Impairment of compression equipment 12,346 1,487 5,121

Impairment of goodwill — — 619,411

Changes in assets and liabilities:

5 unchanged sentences

Accrued liabilities and deferred revenue 4,106 ( 38,358 ) ( 5,195 )

Other liabilities — — ( 7 )

Net cash provided by operating activities 271,885 260,590 265,425

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Non-cash distributions to certain common unitholders (DRIP) $ 1,860 $ 2,132 $ 1,775

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

Transfers from inventories to property and equipment, net $ 54,570 $ 22,329 $ 10,793

Changes in capital expenditures included in accounts payable and accrued liabilities $ 3,644 $ 6,507 $ 720

7 unchanged sentences

We are a Delaware limited partnership.

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.

Through our operating subsidiaries, we provide natural gas compression services to customers under fixed-term contracts in the natural gas and crude oil industries, using 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.

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

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

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

All intercompany balances and transactions have been eliminated in consolidation.

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.

USA Compression Management Services, LLC (“USAC Management”), a wholly owned subsidiary of the General Partner, performs management, administrative and operating services for us, and provides us with personnel to manage and operate our business.

All of our employees, including our executive officers, are employees of USAC Management.

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None of our employees are subject to collective bargaining agreements.

(2) Basis of Presentation and Accounting Policies

(2) Basis of Presentation and Significant Accounting Policies

Basis of Presentation

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Allowance for Credit Losses

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

We evaluate allowance for credit losses with reference to our trade accounts receivable balances, which are 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.

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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 owed to us, 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 experiences 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.

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

When property and equipment is retired or sold, the associated carrying value and the related accumulated depreciation are removed from our accounts and any related gains or losses are recorded within our Consolidated Statements of Operations within 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.

1 unchanged sentence

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.

The carrying value of long-lived assets 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 most common circumstance requiring compression units to be evaluated for impairment involves idle units that 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.

1 unchanged sentence

The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, based on an estimate of discounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units 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 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, 2023, 2022, and 2021.

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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 also were not impaired.

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

We did no t record any impairment of identifiable intangible assets for the years ended December 31, 2023, 2022, or 2021.

Goodwill represents consideration paid in excess of the fair value of the identifiable net assets acquired in a business combination.

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.

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Revenue Recognition

8 unchanged sentences

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

Net earnings for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities.

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

2 unchanged sentences

(“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.

federal and state income tax purposes and any resulting tax impacts attributable to Finance Corp are included within our consolidated financial statements.

Refer to Note 9 for more detailed information about the Texas Margin Tax for the years ended December 31, 2023, 2022, and 2021.

9 unchanged sentences

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

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.

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

1 unchanged sentence

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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.

8 unchanged sentences

737,963 725,625

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.

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.

Significant estimates used in our goodwill impairment analysis included cash flow forecasts, our estimate of the market’s weighted-average cost of capital, and market multiples, which are Level 3 inputs.

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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.

We consider counterparty credit risk and our own credit risk in the determination of the estimated fair value.

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

Interest-rate swap $ 1,204 $ —

Refer to Note 8 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 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 allowance for credit losses, which was $ 2.3 million and $ 1.2 million at December 31, 2023 and 2022, 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):

9 unchanged sentences

Balance as of December 31, 2023 $ 2,260

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.

Unfavorable developments related to customers in bankruptcy was the primary factor supporting the recognized increase to the allowance for credit losses for the year ended December 31, 2023.

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

During the year ended December 31, 2021, we recognized a reversal of $ 2.7 million to the current-period provision for expected credit losses.

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

(4) Inventories

5 unchanged sentences

Total inventories $ 114,728 $ 93,754

$ 93,754 $ 85,816

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(5) Property and Equipment and Identifiable Intangible Assets

Property and Equipment

17 unchanged sentences

Depreciation expense on property and equipment was $ 216.7 million, $ 207.3 million, and $ 209.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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.

During the years ended December 31, 2023 and 2021, there were gains on disposition of assets of $ 1.7 million and $ 2.6 million, respectively.

During the year ended December 31, 2022, there was a loss on disposition of assets of $ 1.5 million.

For the years ended December 31, 2023, 2022, and 2021, we evaluated the future deployment of our idle fleet assets under then-current market conditions and retired 42 , 15 , and 26 compression units, respectively, representing approximately 37,700 , 3,200 , and 11,000 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 $ 12.3 million, $ 1.5 million, and $ 5.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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.

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

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

USA COMPRESSION PARTNERS, LP

13 unchanged sentences

2024 $ 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.

Determining fair value of a reporting unit requires judgment and use of significant estimates and assumptions.

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 an impairment was 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.

Cash flow projections were derived from four-year operating forecasts plus an estimate of later-period cash flows, all of which were developed by management.

Subsequent-period cash flows were developed using growth rates that management believed were reasonably likely to occur.

Under the market approach, we determined fair value by applying valuation multiples of comparable publicly traded companies to the projected EBITDA of the Partnership and then averaging that estimate with similar historical calculations using a three-year average.

In addition, we estimated a reasonable control premium representing the incremental value that would accrue to us if we were to be acquired.

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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(6) Other Current Liabilities

Components of other current liabilities included the following (in thousands):

Accrued sales tax contingencies (1) $ — $ 44,923

Accrued interest expense 31,960 32,763

1 unchanged sentence

Accrued capital expenditures 13,672 10,028

________________________

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

(7) Lease Accounting

1 unchanged sentence

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

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

We determine if an arrangement is a lease at inception.

8 unchanged sentences

Variable costs such as our proportionate share of actual costs for utilities, common area maintenance, property taxes, and insurance are not included in the lease liability and are recognized in the period in which they are incurred.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

For short-term leases (leases that have terms of twelve months or less upon commencement), lease payments are recognized on a straight-line basis and no ROU assets are recorded.

11 unchanged sentences

Other liabilities ( 722 ) ( 1,211 )

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

16 unchanged sentences

Total lease costs $ 6,414 $ 6,168 $ 6,183

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

17 unchanged sentences

Finance leases — 790 430

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Maturities of lease liabilities as of December 31, 2023, consisted of the following (in thousands):

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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, 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.

Maintenance revenue and interest income recognized for the year ended December 31, 2021 was $ 0.3 million and $ 0.1 million, respectively.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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.

(8) Income Tax Expense (Benefit)

(8) 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 was $ 700 million and had a termination date of April 1, 2025.

Under the interest-rate swap, we paid a fixed interest rate of 3.785 % and received floating interest-rate payments that were indexed to the one-month SOFR.

In October 2023, we modified our existing interest-rate swap to continue to manage interest-rate risk associated with the floating-rate Credit Agreement.

The notional principal amount under the modified interest-rate swap remains $ 700 million and the termination date was extended from April 1, 2025 to December 31, 2025.

Under the modified interest-rate swap, we pay a fixed interest rate of 3.9725 % and continue to 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 Consolidated Balance Sheets at fair value and is classified as current or long-term depending on the expected timing of settlement, and gains and losses associated with the derivative instrument are recognized currently in gain on derivative instrument within the Consolidated Statements of Operations.

Cash flows related to cash settlements for the periods presented are classified as operating activities within the Consolidated Statements of Cash Flows.

The following table summarizes the location and fair value of our derivative instrument on our Consolidated Balance Sheets (in thousands):

Assets Liabilities

December 31, December 31,

Balance Sheet Classification 2023 2022 2023 2022

Derivative instrument $ 5,670 $ — $ — $ —

Derivative instrument, long term — — 4,466 —

The following table summarizes the location and amounts recognized related to our derivative instrument within our Consolidated Statements of Operations (in thousands):

Year Ended December 31,

2023 2022 2021

Gain on derivative instrument $ 7,449 $ — $ —

(9) Income Tax Expense

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

7 unchanged sentences

$ 1,417 $ 1,167 $ 916

Deferred tax expense (benefit) ( 151 ) ( 42 ) 530

Deferred tax benefit ( 52 ) ( 151 ) ( 42 )

Total income tax expense $ 1,365 $ 1,016 $ 874

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):

9 unchanged sentences

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 within the Consolidated Statements of Operations.

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.

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

Refer to Note 17 for more detailed information about our IRS examinations.

Examinations of our Texas Margin Tax returns for report years 2018 through 2021 were completed in 2023 by the Texas Comptroller of Public Accounts with no material adjustments.

In general, USA Compression and its subsidiaries are no longer subject to examination by the IRS, and most state jurisdictions, for the 2018 and prior years.

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.

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 eligible, issue a revised information statement to each unitholder, and former unitholder, with respect to an audited and adjusted return.

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

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

(9) Long-term Debt

Our long-term debt, of which there is no current portion, consisted of the following (in thousands):

(10) Debt Obligations

Our debt obligations, of which there is no current portion, consisted of the following (in thousands):

Senior Notes 2026, aggregate principal

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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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The Credit Agreement has an aggregate commitment of $ 1.6 billion (subject to availability under our borrowing base).

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:

In addition, under the Credit Agreement the Partnership’s Secured Obligations (as defined therein) are secured by:

(i) substantially all of the Partnership’s assets and substantially all of the assets of the guarantors party to the Credit Agreement, excluding real property and other customary exclusions;

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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.

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(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, 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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• 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 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.

• a maximum funded debt-to-EBITDA ratio, defined in the Credit Agreement as the Total Leverage Ratio, determined as of the last day of each fiscal quarter with EBITDA annualized for the most-recent fiscal quarter, of 5.25 to 1.00.

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.

For purposes of the above covenants, EBITDA is calculated as set forth in the Credit Agreement.

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

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

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

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

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

As of December 31, 2023, we had outstanding borrowings under the Credit Agreement of $ 871.8 million and $ 728.2 million of remaining unused availability of which, due to restrictions related to compliance with the applicable financial covenants, $ 529.1 million was available to be drawn.

The borrowing base consists of eligible accounts receivable, inventory,

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.

and compression units.

The largest component, representing 93 % of the borrowing base as of December 31, 2023, 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 for the year ended December 31, 2023, was 7.68 %, and our weighted-average interest rate under the Credit Agreement as of December 31, 2023, was 7.98 %.

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

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

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2024 101.719 %

2025 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 2027 (as described above), we may be required to offer to repurchase the Senior Notes 2027 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

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

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

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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 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.

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

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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”) with certain investment funds managed, or advised, by EIG Global Energy Partners.

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.

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) two tranches of warrants to purchase common units with certain investment funds managed, or advised, by EIG Global Energy Partners.

We issued the holders of the Preferred Units an aggregate of 500,000 Preferred Units with a face value of $ 1,000 per Preferred Unit, a tranche of warrants with the right to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit, and a tranche of warrants with the right to purchase 5,000,000 common units with a strike price of $ 17.03 per common unit.

Refer to Note 12 for further information on these warrants.

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

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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 % on or after April 2, 2023.

As of April 2, 2023, 100 % of 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”).

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.

As of December 31, 2023, the Preferred Units are convertible into a maximum number of 24,985,633 common units, assuming there are no unpaid cash distributions on the Preferred Units.

USA COMPRESSION PARTNERS, LP

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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, 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.

As of 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 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.

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As the Preferred Units are not currently redeemable, and it is not probable that they will become redeemable, adjustment to the initial carrying value is not necessary and would only be required if it becomes probable that the Preferred Units would become redeemable.

Changes in the Preferred Units’ balance are summarized below (in thousands):

January 2024 Conversion

On January 12, 2024, the holders of the Preferred Units elected to convert 40,000 Preferred Units into 1,998,850 common units.

These Preferred Units were converted into common units and, for our fourth-quarter 2023 distribution, the holders received the common unit distribution of $ 0.525 on the 1,998,850 common units in lieu of the Preferred Unit distribution of $ 24.375 on the converted 40,000 Preferred Units.

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

Preferred Units

Balance at December 31, 2019 $ 477,309

Balance as of December 31, 2020 $ 477,309

Net income allocated to Preferred Units

Cash distributions on Preferred Units

Balance at December 31, 2020 477,309

Balance as of December 31, 2021 477,309

Net income allocated to Preferred Units

Cash distributions on Preferred Units

Balance at December 31, 2021 477,309

Balance as of December 31, 2022 477,309

Net income allocated to Preferred Units

Cash distributions on Preferred Units

Balance at December 31, 2022 $ 477,309

Balance as of December 31, 2023 $ 476,334

Refer to Note 14 for information about the rights EIG Veteran Equity Aggregator, L.P.

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Notes to Consolidated Financial Statements

(11) Partners’ Capital (Deficit)

(12) Partners’ Deficit

The change in common units outstanding were as follows:

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Issuance of common units under the DRIP

Exercise and conversion of warrants into common units 534,308

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

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On January 11, 2024, we announced a cash distribution of $ 0.525 per unit on our common units.

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

The distribution was paid on February 2, 2024, to common unitholders of record as of the close of business on January 22, 2024.

During the years ended December 31, 2023, 2022, and 2021, distributions of $ 1.9 million, $ 2.1 million, and $ 1.8 million, respectively, were reinvested under the DRIP resulting in the issuance of 87,808 , 124,255 , and 118,399 common units, respectively.

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 these warrants was net settled by the Partnership for 534,308 common units.

On October 27, 2023, 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 exercised in full by the holders.

The exercise of the warrants was net settled by the Partnership for 2,360,488 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.

As of December 31, 2023, no warrants remained outstanding.

The warrants outstanding as of December 31, 2022 were presented within the equity section of the Consolidated Balance Sheets in accordance with GAAP as they were indexed to the Partnership’s common units, and required physical settlement or net settlement in the Partnership’s common units.

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

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Notes to Consolidated Financial Statements

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.

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.”

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 year ended December 31, 2023, approximately 1,167,000 and 873,000 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 years ended December 31, 2022 and 2021, approximately 980,000 and 829,000 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.

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

For the year ended December 31, 2021, our outstanding warrants were not included in the computation as they were not considered “in the money” for the period.

(13) Revenue Recognition

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Contract operations revenue

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.

Revenue from contracted compression, natural 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 .

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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.

Services generally are billed monthly, one month in advance of the commencement of the service month, except for certain

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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.

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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Performance Obligations

As of December 31, 2022, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue is $ 606.6 million.

As of December 31, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 1.0 billion.

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

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$ 552,753 $ 248,288 $ 128,972 $ 71,823 $ 24,757 $ 1,026,593

(13) Transactions with Related Parties

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.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(14) Transactions with Related Parties

We provide natural gas compression and treating services to entities affiliated with Energy Transfer, which as of December 31, 2023, owned approximately 46 % of our limited partner interests and 100 % of the General Partner.

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

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Related-party revenues $ 21,726 $ 15,655 $ 11,967

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.

We had approximately $ 0 and $ 52,000 within related-party receivables on our Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively, from those entities affiliated with Energy Transfer.

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).

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The phantom units (including the corresponding DERs) awarded are subject to restrictions on transferability, customary forfeiture provisions, and time vesting provisions.

Phantom unit awards granted after July 30, 2018 vest incrementally, with 60 % of the phantom units vesting on December 5 of the third year following the grant and the remaining 40 % vesting on December 5 of the fifth year following the grant.

Phantom unit awards that were granted to employees of USAC Management prior to July 30, 2018 vested evenly over a three-year service period.

Phantom units granted on or after July 30, 2018, vest in full upon a change in control.

These phantom unit awards vest incrementally, with 60 % of the phantom units vesting on December 5 of the third year following the grant and the remaining 40 % vesting on December 5 of the fifth year following the grant.

Phantom units vest in full upon a change in control.

Award recipients do not have all the rights of a unitholder in the Partnership with respect to the phantom units until the units have vested.

As of December 31, 2023, and 2022, our total unit-based compensation liability was $ 21.9 million and $ 17.7 million, respectively.

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

During the years ended December 31, 2023, 2022, and 2021, we recognized $ 22.2 million, $ 15.9 million, and

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

administrative expense.

$ 15.5 million of compensation expense associated with these awards, respectively, recorded in selling, general, and administrative expense.

During the years ended December 31, 2023, 2022, and 2021, amounts paid related to the cash settlement of vested awards under the LTIP were $ 6.4 million, $ 3.0 million, and $ 3.2 million, respectively.

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(17) Commitments and Contingencies

(a) Major Customers

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.

(a) Major Customers and Concentration of Credit Risk

One customer accounted for approximately 11 % of total revenue for the year ended December 31, 2023.

No customer accounted for 10% or more of total revenues for the years ended December 31, 2022 or 2021.

As of December 31, 2023, one customer accounted for 17 % of our trade accounts receivable, net balance.

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

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable.

Our cash and cash equivalents have a zero-loss expectation because we maintain minimal balances in our cash and cash equivalents’ accounts and have no history of loss.

Trade accounts receivable are due from companies of varying size engaged principally in oil and natural gas activities throughout the U.S.;

therefore, our customers may be similarly affected by changes in economic and other conditions within the industry.

We perform periodic evaluations of our customers’ financial condition, including monitoring our customers’ payment history and current credit worthiness to manage this risk.

We generally do not obtain collateral for trade receivables, but we may require payment in advance.

Payment terms are on a short-term basis and in accordance with industry practice.

We consider this credit risk to be limited due to these companies’ financial resources, the nature of the products and services we provide, and the terms of our customer agreements.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(b) Litigation

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In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

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

The commitments as of December 31, 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

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

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We estimate that the range of losses we could incur is from $ 0 to approximately $ 25.8 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.

federal income tax returns for years 2019 and 2020 currently are under examination by the 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 of 2015, there are several procedural steps, including an appeals process, to complete before a final imputed underpayment, if any, is determined.

Based on discussions with the IRS, we estimate a potential range of loss from a final imputed underpayment of $ 0 to approximately $ 26.4 million, including interest, for potential adjustments resulting from the IRS examinations.

Once a final partnership imputed underpayment, if any, is determined, our General Partner may elect to either 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.

(d) Equipment Purchase Commitments

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

The commitments as of December 31, 2023, were $ 53.4 million, all of which is expected to be settled within the next twelve months.

(e) Environmental

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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.

(18) Recent Accounting Pronouncements

In December 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 improves and enhances income tax disclosure requirements, including new disclosures related to tax rate reconciliation and income taxes paid.

The amendments in this update are effective for annual periods beginning after December 15, 2024, and interim periods within annual periods beginning after December 15, 2025, with early adoption permitted.

ASU 2023-09 is to be applied on a prospective basis, with retrospective application permitted.

We are currently evaluating the impact, if any, of the amendments to ASU 2023-09 on our consolidated financial statements.

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 improves and enhances reportable segment disclosure requirements, including new disclosures related to significant segment expenses.

The amendments in this update are effective for annual periods beginning after

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 is to be applied on a retrospective basis.

We are currently evaluating the impact, if any, of the amendments to ASU 2023-07 on our consolidated financial statements.

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

What changed 10-K

Item 9A. Controls and Procedures